On-premise ERP still makes sense for a lot of companies. While ERP in the cloud offers many advantages over its on-premise brethren, there still are reasons why a company would choose an on-premise solution. So, if the company is not already heavily invested in an ERP system, here are six signs that might be given on-premise a second look before following the cult of the cloud.


Sign #1: Need lots of Customization

 There are times when business processes demand customization or there is a significant advantage from custom code and configuration. If the business needs customization, think of on-premise.

On-premise ERP typically comes with source code that can be fully modified. Customization is always limited in cloud. If there is budget and the need for customization, on-premise is a better choice.


Sign #2: Need of very specific Functionality

 Second sign that there is a want to consider on-premise is, if there are highly specific functionality needs. On-premise ERP systems have evolved to address very specific niche verticals in various industries. In most cases, on-premise ERPs have a longer lifespan than cloud ERPs. Time has allowed the products to mature and become feature-complete. 

Sign #3: Need of Complete Control and Visibility

If the business demands complete control and visibility with its ERP system, on-premise still makes more sense. With on-premise, full control is obtained over every change, configuration, access, component, etc. in the system. 

 
Sign #4: Laws and Regulations Require It

Some lines of business should consider the legal ramifications when selecting their ERP system. On-premise ERP is better for compliance. ERP system often contains personal data that are subject to laws and regulations that vary from country to country. 
 

Sign #5: Want to Manage Software Change

Even software updates can bring unintended consequences. That’s why production environments often lag far behind the latest technological advances—businesses are slow to adopt new features and updates until the ramifications of such upgrades are well understood and disruptions are minimal.

Those that want to manage software change themselves and not break systems that are working already should consider on-premise solutions. Many companies follow a model where they minimize change for things that are working. This is a significant advantage of on-premise ERP, but one that goes unnoticed much of the time with the hype around the cloud.


Sign #6: Use of IT for Competitive Advantage

Finally, another reason to consider on-premise ERP instead of a cloud solution is when the business uses IT in a unique way for business advantage. The cloud makes software easier, but it also makes it more standardized. Thus if your business uses its custom ERP setup to drive advantage over other firms, on-premise makes a lot more sense. 

In general, businesses that use their IT staff to drive competitive advantages through operations are likely to be better off with an on-premise ERP.  On-premise ERP still plays a role, and not every business should go with a cloud-based system.