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

Cloud ERP like Microsoft Business Central 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 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) systems like  Microsoft Business Central, 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