Which Software Model Is Best for ERP System?

Denise Wilkinson

An Enterprise Resource Planning (ERP) system is a software application that helps organizations manage their business processes, such as finance, inventory, human resources, and supply chain management. Choosing the right software model for an ERP system is crucial for its successful implementation and operation. In this article, we will explore the different software models available for ERP systems and which one is the best fit.

Software Models for ERP Systems

There are three types of software models commonly used for ERP systems: On-Premises, Cloud-Based, and Hybrid.

On-Premises Model

The On-Premises Model involves installing the ERP software on servers that are located within the organization’s premises. This model gives organizations complete control over their data and infrastructure. The software can be customized to meet specific business needs, and there are no ongoing subscription costs.

However, there are some downsides to this model. The initial investment required to purchase hardware and licenses can be substantial. Also, maintaining the infrastructure requires a dedicated IT team with expertise in managing servers and databases.

When is it best suited?

The On-Premises model is best suited for large organizations that have a dedicated IT team capable of managing complex infrastructure requirements. It is also suitable for organizations that require high levels of customization and control over their data.

Cloud-Based Model

The Cloud-Based Model, also known as Software as a Service (SaaS), involves accessing the ERP system via the internet through a web browser or mobile application. The software is hosted on remote servers managed by third-party providers who handle all maintenance, security, and upgrades.

This model eliminates the need for upfront investment in hardware or licenses while providing scalability based on business needs. However, it does require ongoing subscription costs and reliance on third-party providers for security and maintenance.

The Cloud-Based model is best suited for small to medium-sized organizations that require a flexible and scalable solution with minimal upfront investment. It is also suitable for organizations with limited IT resources who prefer to outsource maintenance and security.

Hybrid Model

The Hybrid Model combines the On-Premises and Cloud-Based models to create a customized solution that meets specific business needs. This model allows organizations to keep critical data on-premises while using cloud-based services for non-critical data.

This model provides greater control and customization over critical data while taking advantage of the flexibility and scalability of cloud-based services. However, it does require additional complexity in managing the hybrid infrastructure.

The Hybrid model is best suited for larger organizations that require greater control over critical data while taking advantage of the flexibility, scalability, and cost savings of cloud-based services.


Choosing the right software model for an ERP system requires careful consideration of an organization’s unique needs, resources, and goals. The On-Premises model provides complete control over infrastructure but requires significant upfront investment.

The Cloud-Based model offers flexibility and scalability but requires ongoing subscription costs. The Hybrid model provides customization for critical data while taking advantage of cloud-based services.

Regardless of the software model chosen, successful implementation and operation require proper planning, training, and ongoing support. With the right approach, an ERP system can help organizations streamline their business processes and improve overall efficiency.