Categories : Technology

Author : Pratima G Date : Nov 22, 2023

Enterprise Resource Planning and Its Common Types

The right types of ERP systems and ERP-integrated software will help you optimize costs, save time and money, improve financial control and help you gain global regulatory compliance. With cloud-based AP automation software add-on, you can improve your payment security with less fraud or error risks. 

There are many types of ERP software’s from cloud-based, on-premises, hybrid to multi-cloud to choose from. In this blog you can get an overview of each of these four ERP types. 

ERP Systems

ERP systems are used for accounting, financial reporting and managing other business processes with a unified software system and database. While some top ERP software providers and accounting related software vendors offer industry-specific ERP software’s or modules.

ERP software serves different industries such as:

  • Technology
  • Software
  • Manufacturing
  • Construction
  • Distributors 
  • eCommerce
  • Retail
  • Online marketplaces matching sellers and buyers
  • Non-profit 
  • Services
  • Healthcare 

Four Types of ERP Systems

There are four different types of ERP systems deployment they are:

  1. On-premise
  2. Cloud
  3. Hybrid
  4. Multicloud

1. On-premise ERP System

An on-premise enterprise resource planning system is licensed, customizable, upgraded, backed up for data recovery and maintained by the company onsite on its owned servers and computer equipments. 

Pros of On-premise ERP System

  • The company doesn’t pay monthly or annual subscription fee for use of the software as the total costs may be lowered over long-term.
  • The business can make customizations to the software to fit the needs better.
  • The company information and data remain on-site
  • The company isn’t dependent on the software vendor for the system needs
  • Internet outages won’t affect use of an on-premise computer-based system

Cons of an On-premise ERP System

  • It requires a larger initial investment when it comes to software and computer equipment and replacement of the equipments
  • Costs of hiring and retaining a qualified and trained IT staff is more
  • The user company should bear the risk of software obsolescence
  • Cyber security risks are more if the software isn’t upgraded on each computer from time to time
  • Data backups that are performed in-house can contain corrupted files

Your business can go for an on-premise ERP system if it has an established system that is already paid for and well customized and can afford a large and fully-trained IT staff and computer equipment.  

2. Cloud ERP System

A cloud-based ERP system is an Internet-based one that is available from anywhere with an Internet connection at any time. This ERP cloud software system is also referred to as SaaS.

Pros of a Cloud ERP System

  • Small investment to use the software 
  • You can choose a SaaS billing plan that fits your business needs in terms of software features and pricing
  • Cost of computer servers and IT staffs are avoided
  • It is available anytime and anywhere from any Internet-connected device
  • Upgrades are done automatically by the software vendor to all users at the same time.
  • Reduced cyber security risks
  • The software vendors will offer training, knowledge base as well as customer support

Cons of a Cloud ERP System

  • Your company may have to pay more for a cloud ERP system in the long run
  • Less customization can be done compared to the on-premise ERP systems
  • Bugs and additional features will require time for the software vendors to develop or fix

Your business can choose a cloud ERP system for its modern and web-based accessibility from anywhere at any time. You won’t have to invest large upfront in software, computer servers or IT staff. Cloud software’s provide off-site data backup for better disaster recovery as well.

3. Hybrid ERP System 

A hybrid ERP systems for small companies and large alike, uses a hybrid approach combining the use of on-premise infrastructure with cloud systems. These cloud systems include private as well as public clouds for services, storage, data access, and other applications. 

Pros of a Hybrid ERP System

  • Uses different types of ERP systems, infrastructure, and public cloud services that fit the current business needs
  • Easy up gradation of a legacy system by adding modern technologies, big data warehousing, analytics and cloud software
  • You will not have to add company-owned servers or network computer equipment for more functionality
  • More control over the ERP system features expansion, customization and data when an on-premise is included in hybrid.

Cons of a Hybrid ERP System

  • It retains the legacy system in the mix
  • Less flexibility when it comes to changing the system
  • It requires IT involvement inorder to ensure adequate security between the integrated systems

Your business can choose the hybrid ERP solutions for small businesses or large businesses, if you have made large investments in your current on-premise customized ERP system but want to modernize it with the cloud.

4. Multicloud ERP System

Multi-cloud ERP system uses integration to combine multiple third-party cloud applications and services. This includes public cloud with the ERP system. A multi-cloud ERP system doesn’t have to include a private cloud on-premise system, but may be included in the integrated multiple-cloud system. 

Pros of a Multicloud ERP System

  • You can add functionality with the best-in-class third-party cloud-based solutions for a complete optimized ERP implementation
  • It can be used to strengthen financial controls and reduce fraud risk or even achieve other software objectives including disaster recovery from offsite data.
  • It enables adding shared resources of public cloud services to increase capabilities 
  • It can be used from anywhere at any time when the Internet connection is working.
  • Multicloud ERP integration provides a unified system and login to achieve your business goals.

Cons of a Multicloud ERP System

  • A multi-cloud ERP system may require IT staff to ensure adequate security. 
  • Third-party cloud-based software can present hacking opportunities causingcybersecurity vulnerabilities.
  • The total costs of a multi-cloud ERP system can be very high. 
  • When public cloud computing is down, it could cause problems with the overall ERP system availability

Your business should choose a multi-cloud ERP system if you want to combine core ERP software functionality with additive third-party software solutions as well as a shared public cloud computing services using massive non-owned computer infrastructure. You can also get more visibility of real-time data. 

Inorder to achieve the most out of ERP, it is important to know the benefits of an ERP system and explore the types of ERP systems, third-party software and services and components available on the market from a good software development company.