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Understanding the Difference Between Saas & On-Premise ERP

As an executive one of the most important services you’ll have to make decisions about has to do with whether to use traditional on-premise ERP software services or whether to go with the newer form of acquiring software known as Saas. Both forms of services are great and necessary for your business, but they differ very much in pricing, security, and available technical support. This article highlights the top differences between these forms of services that are so crucial for your business to understand.

On-Premise ERP
ERP stands for enterprise resource planning. This method of acquiring software is an on-premise method where a company pays for an actual hard copy of a program (in the form of a CD-Rom). This is the traditional method that companies have used to provide needed software solutions for their daily needs. There is a complete transfer of ownership once the software is purchased outright (meaning no monthly fees) and the parameters of what the software can do or how many users it can support are preset.

Saas stands for software-as-a-service. This form of acquiring software involves paying a monthly subscription fee to your service provider and never involves a complete transfer of ownership; access is contingent on maintaining an account with the provider.
Due to the overuse of the term “Saas” by many to be synonymous with any type of service accessible via a smartphone or web browser, the US Department of Commerce’s National Institute of Standards and Technology (NIST) has published a set of 5 essential characteristics which constitute that an application is running on a cloud infrastructure.

For an application to be considered “Saas”, it must:

1.    Provide on-demand service.
2.    Provide broad network access with any standard device, at any time where there is internet access.
3.    Allow for resource pooling. This means that multiple users can share the same set of computing resources.
4.    Be a measured service. The provider must have a meter in place which it can use to measure how much of the service a company utilizes to adjust billing prices.
5.    Be rapidly elastic. This means that the provider’s computing services must be able to meet changes on demand. For example, if there were to be a sudden increase in users all at once, the service must be able to quickly adapt to meet the demand.



Which service does your business currently use? What qualms does your business have about either form of service? Let us know your opinion on either in the comments section below!

Photos courtesy of 123RF



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