What is Cloud ERP?
According to IDC, global spending on public cloud services is projected to reach $805 billion in 2024, doubling by 2028. This trend reflects growing demand for scalable, low-maintenance systems that can adapt to changing business models.[?]
What is On-Premise ERP?
Gartner estimates that 60% of midsize enterprise workloads will remain on-premise through 2025 due to integration complexity and compliance concerns.[?]
10 Essential Differences Between Cloud ERP & On-Premise ERP: Comparison Chart
Pros and Cons of Cloud and On-Premise ERP
Cloud ERP
According to IT Jungle, over 70% of ERP-related IT spending in 2023 was allocated to cloud solutions.[?]
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Faster go-live cycles: Most cloud ERP systems can be up and running within months, reducing business disruption.
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Hands-off maintenance: Vendors handle all backend responsibilities, freeing internal teams to focus on operations rather than system upkeep.
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Remote-friendly by design: Ideal for companies operating across multiple sites or offering hybrid work models.
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Flexible growth: Capacity and modules can be scaled up or down as your business evolves, with minimal planning or infrastructure changes.
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Recurring subscription costs: Over several years, total costs may exceed what an on-premise model would require.
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Customization constraints: Multi-tenant SaaS models are optimized for standardization, which limits deep process tailoring.
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Dependence on the internet: Any disruption in connectivity, even briefly, can halt access to core functions.
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Less control over change schedules: Frequent updates benefit security and compliance, but some companies may prefer more control over when changes are introduced.
On-Premise ERP
According to Gartner (via Quixy), 60% of midsize businesses are expected to retain a majority of their systems on-premise through 2025, often due to the complexity of existing integrations or regulatory demands.[?]
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End-to-end control: System behavior, data handling, and upgrade cycles are all under your company’s full authority.
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High configurability: Capable of supporting unique business processes or integrating tightly with proprietary tools.
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Stable internal access: No reliance on external internet connections for system uptime.
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Significant capital expenditure: Budgeting must account for infrastructure, licenses, skilled IT staff, and long-term support.
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Slower to adapt: Implementation and change processes are longer and more resource-intensive, which can hinder responsiveness to business shifts.
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Ongoing maintenance load: Your IT team must plan, execute, and manage all updates, security patches, and backups.
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Scalability comes with effort: Expanding capacity requires additional hardware and planning, which may slow down business agility.
Choosing the Right ERP for Your Business
Key Factors to Consider When Selecting an ERP System
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Industry Relevance: Look for ERP solutions that support the specific workflows and reporting requirements of your industry. Generic systems often lack the depth needed for specialized sectors like construction, distribution, or services.
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Compliance and Localization: In markets with complex tax regimes and regulatory reporting (such as the UAE and Saudi Arabia), the ERP system should support automated VAT handling, e-invoicing standards, and corporate tax reporting out of the box.
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Deployment Flexibility: Some businesses require full data control; others need to prioritize accessibility across distributed teams. The ERP should give you the option to choose the hosting environment that best fits your operational model.
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Scalability and Integration: As your business grows, the ERP should be able to scale with you, whether that means adding users, modules, or integrations with third-party tools.
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Implementation and Support: ERP is a long-term commitment. The availability of local expertise, responsive support, and a clear implementation methodology can significantly reduce rollout risk and ensure smoother adoption.
Conclusion


See FirstBit ERP solutions in action
After the demo you will get a quotation for your company.