SaaS ERP vs. Cloud ERP: What’s the Difference?

Priya Naha

Senior Writer

SaaS ERP vs. Cloud ERP: What’s the Difference?

Key Takeaways:

  1. The debate between Cloud ERP vs. SaaS ERP is irrelevant as both offer streamlined business management through online platforms but differ in hosting and management models.
  2. Cloud-based ERP software provides scalability and control, while SaaS ERP offers quick implementation and cost-effectiveness.
  3. Understanding business needs is crucial in choosing between SaaS ERP’s subscription model and Cloud ERP’s on-premise solutions.

Modern companies require advanced technology to manage business workflow seamlessly. So, businesses use Enterprise Resource Planning (ERP) tools to centralize multiple processes in a single platform. 

The ERP market has seen a boom owing to its multiple benefits. It is projected to reach US$ 62.36 Billion by 2028. Moreover, there are multiple ERP options for businesses to choose from. 

But among them the top two contenders are SaaS ERP and cloud ERP.  Let’s see who wins the debate of  SaaS ERP vs. cloud ERP and gets to be a part of your organization.

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Pro-tip

Before deciding between SaaS ERP and Cloud ERP, assess your business's scalability, customization needs, and budget. For rapid implementation and predictable costs, opt for SaaS ERP. Choose Cloud ERP if you require full control over the software and have specific customization requirements, ensuring seamless integration with your business processes.

What is Cloud ERP?

Cloud ERP refers to software that businesses use to manage daily operations, stored in an external data center known as the cloud and accessed online.

The global cloud ERP market is expected to grow at a CAGR of 12.6% by 2030.

Usually, the company does not own the servers located within this data center. These cloud platform solutions are highly commercial and flexible according to the business needs.

 If any business wants to explore cloud technology, these ERP solutions are ideal for any department in the company.

There are two primary ways that cloud ERP infrastructure can be provided: as-a-service or on-premises hosted in the cloud.

In SaaS models, hosting and management are handled by the software vendor. Hosted cloud ERP, on the other hand, involves remote hosting by a third party. if otherwise specified, the company is still in charge of system maintenance and upgrades.

 
Looking for ERP Software?
Check out SoftwareSuggest’s list of the best ERP Software solutions.

Advantages of Cloud ERP Solutions

Cloud ERP solutions are used by more than 53% of global ERP users. The popularity of this solution can be matched with the key benefits offered:

Benefits of cloud ERP By SoftwareSuggest

  • The cloud ERP ensures that businesses get the new methods and technologies without any additional benefits. It is ideal to stay updated using the cloud solutions that help receive upgrades and top features on ERP for businesses.
  • Another advantage of SaaS ERP solutions is their scalability and flexibility, especially when deployed on cloud VPS (Virtual Private Server) infrastructure. This allows businesses to easily adjust their resources and accommodate fluctuations in demand without worrying about hardware constraints. Cloud VPS provides the agility to scale up or down resources as needed, ensuring optimal performance and cost-efficiency for the ERP solution.
  • Outsourcing ERP solutions can help businesses manage their deals more confidently without hampering maintenance issues. Any big and agile business can deviate from the ideal workflow with the mess of hardware and software maintenance. Hence, businesses focusing on specific work processes can go for cloud ERP solutions. Local data storage can create issues for businesses that require timely maintenance, disaster recovery solutions, etc. Partnering with the cloud ERP ensures that companies don’t have to go for the unnecessary maintenance of the resources while it is managed by the service provider only.
  • The cloud technology used in the ERP solutions ensures quick information transfer over the internet. Hence, it is possible to send information across distances without worrying about networking or server security. All the documents between businesses can be shared confidently using cloud ERP solutions. Further, the data security is managed by the company only.

Disadvantages of Cloud ERP

Like any other technology, Cloud ERP solutions also have their limitation. Some of the possible issues with this type of ERP solution that need to be taken care of include:

  • It has limited capabilities in offering flexible ERP solutions according to business needs. Hence, it is important to go for the service providers that offer good features and customization options according to business.
  • There are a couple of challenges regarding hosting and customer information access in cloud ERP solutions. Hence, businesses must comply with the required HIPAA and GDPR guidelines by service providers before connecting with them.
  • The complete control of data and security management shifts to the cloud service provider. Hence, businesses must look for service providers that offer absolute control over the business data and security features.
  • Businesses coming from the on-premise ERP solutions face difficulty migrating the data to the cloud solution. Hence, it is crucial to go for a service provider that offers detailed data migration solutions.

What is SaaS ERP?

SaaS ERP is a service that software vendors offer that users can access via web browsers. One of SaaS ERP’s main advantages is that it relieves organizations of their technological stack issues because the supplier takes care of server setup and management. It is especially helpful, considering how complex ERP implementations can get. 

The SaaS market is rising in popularity and is expected to grow at a CAGR of 15.4% by 2029.

SaaS Market Forecast By SoftwareSuggest

SaaS simplifies ERP, enabling small and midsize companies with limited resources and no internal IT department to explore ERP options. Like any other ERP solution, SaaS-based services can cover all different segments like accounting solutions, production management, HR systems, sales, etc.

The ease of using a SaaS ERP solution on monthly, per-user subscriptions and distribution through the internet is a key characteristic for modern businesses. These services come with vendor services for all system updates and are beneficial for companies requiring customization ERP.

Advantages of SaaS ERP Solutions

Today, SaaS accounts for over 70% of the software used by businesses. By 2025, the rate is expected to increase to 85%. The multiple benefits it offers are the reasons for its immense growth. Some of these benefits are:

SaaS Advantages By SoftwareSuggest

  • These ERP solutions are free from capital expenses. Businesses can pay according to the number of users without paying for unnecessary services. The highly predictable operating expenses ensure that businesses don’t have to spare extra budgets for capital investment in ERP solutions.
  • SaaS ERP solutions’ modern and intuitive user interface ensures that business teams can use it without any difficulty. It further helps businesses increase adoption and improve system functionality.
  • It offers complete functionality for business needs like HR, accounting, supply chain, customer relationship management, etc., under one roof only. Hence, teams don’t have to juggle different platforms to manage business functions.
  • SaaS ERP software is the need of the growing businesses with scope for technological advancements shortly. All the required upgrades and security patches are automatically implemented without any issues to the business. Hence, companies can benefit from the advanced features without losing time in downtime.
  • Any business projecting scalability can go for the SaaS ERP. There is no need to invest in hardware and other technology when the SaaS services can work for your business. Further, it works if a business has to shed extra employees at some time in any revenue cycle.

Check out SoftwareSuggest’s list of the best ERP Software for Small Businesses

Disadvantages of SaaS ERP

No technology can fulfill all business needs, and hence, SaaS ERP comes with its limitations. It is crucial to understand these issues and manage them while using this ERP.

  • The costs of SaaS ERP increase when the businesses increase the workforce. These costs can go exponentially high over the cloud software costs when the workforce increases over time. Hence, the businesses need to look at the projected costs and growth over the service years.
  • The security standards used in the SaaS ERP may compromise the compliances required in highly regulated markets. Hence, it is important to have a detailed look at the security standards of ERP service providers. Further, businesses going for these services must check for the strict organizational rules for security standards.
  • It becomes difficult to accommodate the universal SaaS solutions’ specific business processes or operations. Hence it is ideal for the SaaS ERP service providers that offer customized solutions according to business needs.

SaaS ERP vs. Cloud ERP

When someone asks you what is the difference between SaaS and ERP on the cloud, you can show them this blog! Now, let’s see the businesses that benefit from it.

AspectSaaS ERPCloud ERP
Suitable for businessesBusinesses with limited time and budgetsBusinesses with unique working models
Implementation SpeedModerate Moderate
CustomizationReady-to-go solutionsHighly customizable solutions
CybersecurityExcellent cybersecurity featuresEnhanced security features
ControlLimited controlIn-house IT team control
AccessibilityLimited accessibilityImproved accessibility across boundaries
MobilityModerate mobilityIncreased mobility
IT ExpensesReduced IT expensesIncreased IT expenses
Business Partner ConnectivityLimited connectivityEnhanced connectivity

 Any business looking to shift from on-premise ERP solutions can swiftly move to cloud ERP solutions. Companies having unusual business models and large businesses can trust the robust features of cloud ERP marketing automation software. 

Companies using cloud computing technology can have great control over the software with an in-house IT team. All the system improvements, upgrades, patches, etc., can be managed by the service companies according to their current needs.

Any business looking for quick ERP implementation can go for SaaS ERP solutions. The cutting edge of these solutions includes low initial costs, unlimited scalability, etc. Further, businesses having limited time and budgets can go for SaaS solutions. These companies can have great cybersecurity features with SaaS services that give an additional layer of security over other ERP options.

To cut it short, any business with a unique working model can use cloud ERP to customize their business needs. On the other hand, SaaS ERP is a fit for businesses that don’t require detailed, customized ERP solutions.

The IT expenses, business partner connectivity, and mobility are increased for cloud ERP solutions. The closest competitors- SaaS-based solution allows full control to the companies. Hence, SaaS solutions for ERP are perfect for businesses that aim to offer top services in highly competitive markets.

Cloud ERP solutions ensure accessibility, keep costs down, and offer flexibility in accessing data across boundaries. Businesses can give a major boost to their productivity without compromising security with cloud ERP software.

 SaaS ERP is for businesses that want ready-to-go ERP solutions with quick implementation. There is no need to pay for unnecessary on-premise solutions when businesses can go for the pay-per-user model of SaaS services.

Conclusion

95% of businesses improve their processes after implementing an ERP system. The advanced features of the SaaS ERP and cloud ERP make them a top priority for any small, medium, or large business.  Cloud ERP is perfect for businesses having special customized requirements, while SaaS ERP works well for businesses that don’t need detailed, customized features. 

SaaS ERP is a subscription-based model, while cloud ERP offers on-premise ERP solutions.

Any business shouldn’t feel confused about selecting their ideal partner out of SaaS vs. ERP based on the cloud. It all comes down to the due diligence conducted by the businesses in selecting their ERP partner amongst SaaS ERP or cloud ERP.

Frequently Asked Questions

SaaS ERP is delivered as a service by vendors, accessed via browsers, with providers managing servers. Cloud ERP encompasses SaaS and other ERP deployment models, like private or hybrid clouds, offering varying degrees of control.

SaaS ERP typically involves subscription-based pricing, while Cloud ERP may offer various pricing models, such as pay-per-use or tiered pricing based on resource usage.

For small businesses, SaaS ERP is typically more suitable due to its accessibility, cost-effectiveness, and the provider's management of servers, making it easier to adopt and manage.

Data security in SaaS ERP and Cloud ERP is ensured through encryption, access controls, regular audits, and compliance measures implemented by both the service provider and the customer.

Yes, both SaaS ERP and Cloud ERP can integrate seamlessly with other business applications, facilitating data exchange and workflow automation across various software platforms.

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