Cloud ERP Vs. On-Premise ERP: Which One is Cheaper? 

Cloud ERP is way cheaper than on-premise, credit to its low-cost ownership and easy updates. ERP solutions have always been one of the most important assets of a business. Most businesses earlier preferred on-premise ERP like Dynamics NAV Implementation. However, as soon as cloud ERP like Microsoft Business Central debuted, it stole all the spotlight throughout the ERP industry. Businesses that previously implemented Dynamics NAV are now shifting to the Microsoft Business Central Upgrade. 

Thanks to the convenience of cloud ERP, businesses can operate their business in a much more secure and efficient environment. Furthermore, according to research conducted by Gartner, about 60% of large-scale businesses globally considering replacement of their ERP are projected to migrate to cloud deployment from the on-premise solution. 

The major factor that drives businesses for the on-prime to cloud ERP shift is its cost-efficiency. Cloud ERP costs make the business environment more affordable as compared to the on-premise ERP, owing to its influential factors.  

Factors Impacting Cloud ERP Costs 

Many factors may influence the net income of a business after computing the total cost of ownership of a prospect cloud ERP system. Given below are some of the crucial factors that supposedly cut cloud ERP costs.  

Hardware and Server Cost  

When you have a cloud-based solution like Microsoft Business Central, you do not have to spend extra to purchase a server and host your solution, nor do you have to engage your IT team for hardware and software maintenance. The way you can keep your operating and power (electricity) costs low. Whereas, if you opt for an on-premise system, you are bound to purchase a server and involve your IT team in its hardware and software maintenance. Not to mention, you have to replace or upgrade every 5 years 

Licensing Fees 

When it comes to the cloud-based ERP (Enterprise Resource Planning) system, businesses do not have to pay a huge upfront cost. Generally, these systems are priced under a monthly, quarterly, or annual subscription, depending upon the number of users. In contrast, on-premise systems operate on a one-time perpetual licensing model, thus making a company pay higher upfront costs to buy the software. Therefore, we can say cloud solutions make financial management way easier for small businesses looking for a lower initial acquisition price.  


A business needs customization as soon as it starts growing to manage complex processes more efficiently. On-premise solutions are customizable but are directly associated with your existing system. Therefore, as you upgrade your system, it is most likely to wipe out all the previous modifications and you will have to engage your IT resources to remodify everything. On the other hand, cloud ERP systems may not be customizable but flexible enough to keep your customizations intact during the software upgrade. 

Maintenance and Upgrades 

In the case of cloud ERP, the service provider takes charge of the routine maintenance and upgrade, leaving you no job to fulfill at your end. The updates are automatic, painless, quicker and a lot easier. It allows you to stay on the latest version, for example, Microsoft keeps updating Microsoft Business Central frequency and ensures major updates twice a year hence letting the business owner optimize the latest technology.  

However, in the case of on-premise solutions, you are responsible for the system update and daily maintenance.  


Cloud ERP can support a massive number of users and be flexible at the same time, allowing a business to scale up or down according to their requirements easily. Therefore, reducing costs in the long run as you only pay for the functionalities and according to the volume of users. You cannot expect the same from an on-premise solution. Scaling your business with an on-premise solution would demand additional investment in infrastructure and hardware.  


You can easily integrate third-party applications with Cloud ERP solutions while complementing your business evolution. However, it is not that easy for an on-premise solution to do the same. For instance, a cloud ERP solution such as Microsoft Dynamics Business Central seamlessly integrates with Microsoft Office 365 and other Microsoft applications such as Power Platform. You can always extend the functionality with Microsoft Appsource.  

Cloud ERP Ensures some of the most robust benefits like better security, agility, flexibility, and most importantly lower costs. They replace the hard maintaining and updating systems and allow businesses to go further and invest their resources in something more crucial. Microsoft Business Central is one of the most efficient cloud-based systems. If you have been using Dynamics NAV and looking for a NAV to BC Upgrade, contact Trident, the Gold Microsoft Dynamics 365 Implementation Partner. Contact us for more information.