Cloud versus on-premise. The most common ERP question.
The real answer? It depends on your total cost of ownership over 5 years.
Cloud starts cheaper. Year one costs are 40-60% lower. But ongoing subscription costs accumulate.
On-premise has higher upfront costs but lower ongoing expenses. Break-even typically happens in year 3-4.
5-Year Total Cost of Ownership
100-person company:
Cloud ERP: Year 1 $80K, Years 2-5 $50K/year = $280K total
On-premise ERP: Year 1 $180K, Years 2-5 $25K/year = $280K total
Break-even: Year 3
400-person company:
Cloud ERP: Year 1 $350K, Years 2-5 $200K/year = $1.15M total
On-premise ERP: Year 1 $750K, Years 2-5 $120K/year = $1.23M total
Cloud is cheaper over 5 years at this scale
Security and Control Differences
Cloud: Vendor manages security patches, backups, disaster recovery. You trust their processes.
On-premise: You control everything. You manage patches, backups, security. You hire the staff.
Regulated industries often prefer on-premise for data sovereignty.
Most SMBs get better security with cloud than they can afford in-house.