Cloud ERP vs On-Premise ERP: Making the Right Choice for Your Business
Choosing the right ERP system is one of the most important technology decisions for manufacturers and engineering companies today. With options ranging from cloud-based to on-premise solutions, understanding the differences in cost, security, and customisation is key. This guide explains the main factors to consider when deciding between Cloud ERP vs On-Premise ERP, helping you choose the system that best supports efficiency, growth, and long-term success.
Why Cloud ERP vs On-Premise ERP Matters for Manufacturers
There’s now a wider variety of ERP systems on the market than ever before. With clear evidence that ERP software brings massive benefits - improved efficiency, reduced costs and greater competitiveness - the question for most manufacturers is no longer “do we need ERP?” but “what kind of ERP do we need?”
One of the biggest considerations is how your ERP system should be hosted. In other words: should it be installed on your own servers (on-premise), or delivered via the cloud?
Software in general has been shifting to the cloud for years, and ERP is no exception. Increasingly, cloud is becoming the standard choice for companies who want flexibility, lower risk and faster ROI. That said, some businesses - particularly in sensitive or highly regulated industries - may still need an on-premise solution for compliance reasons.
To help you decide on the right choice for your business, let’s look at three practical factors: cost, security, and customisation.
Cloud ERP vs On-Premise ERP: 3 Key Considerations
1. Cost: Cloud ERP vs On-Premise ERP Investment Models
One of the main drivers behind the popularity of cloud ERP is the lower upfront investment. With cloud, you typically pay a monthly or annual subscription (often pay-as-you-go), with support and training bundled in. This turns ERP into a predictable operating cost, without the large capital expense of hardware and licences. Scaling up or down is also easier, so you only ever pay for what you use.
On-premise ERP usually requires a much larger upfront spend, plus potential investment in servers and hardware. While this can sometimes be offset by grants or tax treatment as capital expenditure, it also means ROI can be slower. Over time, the costs of cloud and on-premise tend to converge, but cloud gives you the advantage of much lower financial risk at the start.
2. Security: Is Cloud ERP Safer Than On-Premise ERP?
Security used to be the main argument in favour of on-premise ERP. Many manufacturers felt safer keeping sensitive data “in-house”, behind their own firewalls. But the reality is that cloud providers have significantly raised the bar on security - investing far more in encryption, access controls, redundancy and monitoring than most SMEs could ever justify on their own.
Some of the traditional risks of on-premise systems - like outdated patches, unmonitored vulnerabilities, or even physical risks such as server failure, flood or fire - simply don’t apply in the same way with cloud. Updates are applied automatically, security monitoring is continuous, and data is backed up across multiple locations.
That’s not to say security is a non-issue. Data in the cloud is still hosted off-site and subject to compliance rules. But modern ERP vendors, like E-Max Systems, use highly certified data centres that adhere to strict international standards (such as ISO 27001 and GDPR compliance). In practice, this often means your business data is safer in the cloud than on a local server in your back office.
Of course, there are exceptions. Companies operating under strict defence, nuclear or oil and gas supply chain contracts may be required to host ERP on-premise. If that applies to you, then a local installation remains the safer choice. But for the vast majority of manufacturers, cloud ERP removes many of the risks that once kept IT teams awake at night.
3. Customisation: Flexibility in Cloud ERP vs On-Premise ERP
On-premise ERP still tends to offer more freedom when it comes to deep customisation. For highly specialised manufacturers, this can be valuable. The trade-off, however, is that updates become more complex and require greater internal IT resource to manage.
Cloud ERP is generally more “out-of-the-box” and designed to meet the needs of most manufacturers without heavy modification. While that might sound restrictive, it can actually be an advantage: implementation is faster, updates happen seamlessly, and you don’t need to worry about system downtime when new versions are rolled out. Many cloud ERP platforms now also offer modular add-ons, which give you flexibility without the risks of heavy customisation.
Practical Considerations Beyond Cost, Security and Customisation
While cost, security and customisation are the main decision drivers when comparing cloud ERP vs on-premise ERP, there are other factors that can influence which option works best for your business. One of the most important is connectivity.Internet Reliability and Speed
Cloud ERP depends on your internet connection to keep operations running smoothly. For most manufacturers in the UK, broadband speeds are now strong enough to support daily business-critical applications. However, if your site is in an area with weaker coverage or occasional blackouts, you’ll need to assess whether your connection is reliable enough.
• Reliability: Consider the track record of your internet service provider (ISP). Even short outages could disrupt production planning or order management if your ERP is cloud-based.
• Speed: ERP involves moving large amounts of data in real time, so your connection must be fast enough to handle peak usage. Slow internet could create bottlenecks and frustrate users.
Remote and Multi-Site Working
For businesses operating across multiple sites, or with staff working remotely, cloud ERP offers a huge advantage: instant access from any location with internet. On-premise ERP can be made accessible via VPN or remote desktop, but these add extra complexity and IT overheads. If your business model relies on collaboration across teams and locations, cloud hosting can give you a significant productivity edge.
Disaster Recovery and Business Continuity
Another often-overlooked factor is how your ERP system would perform in the event of a disaster. Cloud ERP typically includes built-in disaster recovery and backups across multiple data centres. On-premise ERP puts the burden on your IT team to plan, test and maintain a recovery process — and to store backups securely off-site. For many manufacturers, the resilience of cloud ERP provides peace of mind that critical data and operations are always protected.
Choosing the Right ERP Hosting Option for Your Business
At E-Max Systems, we recognise that every manufacturing and engineering company has different requirements when it comes to ERP. While our Cloud ERP solution is designed to meet the evolving needs of modern manufacturers - offering flexibility, scalability, strong data security, and the ability to support remote and multi-site working - we also understand that some businesses may have specific reasons for preferring an on-premise ERP system.
That’s why we continue to provide both options. For manufacturers who need to keep their systems on-site, whether due to regulatory demands, infrastructure, or internal policies, our on-premise ERP remains a robust and proven solution. At the same time, many of our customers are finding that our Cloud ERP system not only reduces the burden of managing servers and hardware but also gives them easier upgrades, and greater business continuity.
Ultimately, the choice between cloud and on-premise ERP comes down to what works best for your operations today and into the future. Whichever route you take, our focus is on helping you implement the right system to streamline processes, improve efficiency, and support growth.
Our friendly team are available to discuss any questions you have on hosting options. You can contact us on 0808 109 2035 or drop us an email and the team will gladly answer any queries you have.
Frequently Asked Questions about Cloud vs On-Premise ERP
Is cloud ERP secure for manufacturers?
Yes. Cloud ERP solutions use advanced encryption, regular security updates, and secure data centres that often exceed the in-house capabilities of many manufacturers. This makes cloud ERP a reliable and safe option for managing sensitive operational and financial data.
Do I still need on-premise ERP?
For most manufacturers, cloud ERP offers more flexibility and lower long-term costs. However, some businesses may still prefer an on-premise ERP system due to regulatory requirements, infrastructure limitations, or internal policies. At E-Max, we support both options so you can choose what best suits your business.
What are the main benefits of cloud ERP for manufacturing and engineering companies?
Cloud ERP gives manufacturers real-time visibility across operations, supports remote and multi-site working, reduces IT infrastructure costs, and ensures easier upgrades. This helps streamline processes, improve productivity, and support business growth.
Can I move from on-premise to cloud ERP in the future?
Absolutely. Many manufacturers start with on-premise ERP and later migrate to the cloud as their needs change. Our team can support you at every stage to ensure a smooth transition when the time is right.
If you’d like to find out more about E-Max ERP, take a look at our website, contact us on 0808 109 2035 or drop us an email. You can also book a free demo with us to see how E-Max ERP - cloud or on-premise - can help your business achieve its goals.