In recent years, cloud-based ERP has become the mainstream instead of the conventional on-premises ERP. As a result, almost all major ERP vendors in the world are also converting to cloud ERP. When selecting an ERP for your company, you may want to know the differences between conventional and cloud ERP.
So, this article will give a brief overview of cloud ERP, its types, and options for purchase. If you’re looking for an article on comparing on-premises ERPs, see Part 4, Cloud ERP vs On-Premise ERP – Which Is Better.
What is Cloud ERP
Cloud ERP in a nutshell is an ERP that can be used in a cloud environment. In the past, ERP (Enterprise Resource Planning) was used by purchasing software from a vendor, building it on its own server, and then using it. However, cloud ERP uses the ERP system as a service on the cloud instead of managing the server in-house. If you have access to the internet, authenticated users can use the software from anywhere inside or outside the company at any time.
There are two main types of cloud ERPs used in companies. Let’s look at each feature.
Type 1 – SaaS (Software as a Service)
It is a SaaS type cloud ERP that is currently mainstream. The SaaS type is a form in which ERP software on a cloud server provided by a vendor is used via the Internet. The vendor updates the system on a regular basis, which ensures that users always have access to the latest version of the system. Basically, a fixed amount or pay-as-you-go charge is included in the monthly fee, including ERP, database license, server software, hardware, and other infrastructure environments. Usually, you pay the fee determined by the number of users and the function.
Type 2 – IaaS (Infrastructure as a Service)
The IaaS type is a form in which the ERP system that the company is already using or intends to use is installed on a cloud server in the data center and used via the Internet in the same way as SaaS. For Iaas type, we usually purchase ERP, database license, server software other than OS, etc., and use the ERP system while owning the license. The contents such as software are managed in-house, version upgrades are performed based on decided timing, and upgrade costs are paid each time.
There are two types of IaaS types: one is to purchase the OS and database server software and own it, and the other is to subscribe by paying a monthly fee without purchasing it.
Characteristics of Cloud ERP
The cost types and characteristics of SaaS and IaaS type are summarized below:
Saas (Software as a Service)
|Software License||Use the system by paying a monthly fee according to the number of users and usage functions.|
|Implementation Service||In many cases, the key features of SAAS ERP have already been set up so that users can use the system immediately. Since it is not necessary to build an environment to operate the system, it can be installed in a shorter time than general on-premises services.|
|Annual Enhancement Fee||No Annual Enhancement fee.|
IaaS (Infrastructure as a Service)
|Software License||Purchase software and hardware.||Pay hardware and software leasing fees according to the number of users.|
|Implementation Service||Pay the partner a fixed amount or the total cost for the ERP implementation service.||Same as left.|
|Annual Enhancement Fee||Pay the Annual Enhancement fee for the first year in advance. This comes with a new version license etc. at the time of upgrade.||No Annual Enhancement fee. An upgrade license is included in the monthly fee.|
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- How to Select an ERP
- How Much Does An ERP System Cost?
- How Long Will An ERP Project Take To Implement?
- Cloud ERP vs On-Premise ERP – Which Is Better?
- How to Select an ERP Vendor
- How To Get The Best Price On An ERP System
- ERP Project – Fixed Bid or Time and Materials?
- ERP Comparison: Dynamics 365 Finance and Operation, Dynamics 365 BC, Dynamics GP
- What is a Cloud ERP Solution?