Quick Summary
1. Cloud ERP offers – scalability. It is flexible, subscription-based, and ideal for SMEs and multi-location manufacturers in India.
2. On-Premise ERP Provides Control – This is installed on company servers, giving complete control over data and customisation.
3. Cost Structures Differ – Cloud ERP requires monthly/annual fees, while on-premise ERP requires a heavy upfront investment.
4. Accessibility Varies – Cloud ERP allows remote access from anywhere, but on-premise ERP is limited to office systems.
5. The best ERP depends on business size, cloud ERP suits most Indian MSMEs, while on-premise ERP fits large enterprises with strong IT teams
For any manufacturing business in India, ERP (Enterprise Resource Planning) forms the lifeline of every operation, supply chain, and production. Yet one of the popular confusions is cloud ERP vs on-premise ERP. Which one is better for the manufacturing industry? In this post, we’ll explain the meanings behind cloud ERP and on-premise ERP, their differences, their benefits, and how Indian manufacturers should pick between the two. And we’ll provide a comparison table and links to resources for further reading.
What is Cloud ERP?
Cloud ERP is a cloud-based ERP system that the vendor hosts in its cloud server. There’s no local server or big IT infrastructure necessary. Businesses can access the system through the internet on laptops, mobiles, or tablets.
- It’s subscription-based, and so you pay per month or year
- The vendor manages security, updates and data backups.
- Cloud ERP is scalable, flexible, and especially suitable for growing businesses and multi-location manufacturers.
What is On-Premise ERP?
On-premise ERP refers to the traditional model where the software is installed and operated on a company’s internal servers and hardware systems. The software and data stay in-house, giving the business complete control.
- Typically, you pay a one-time licensing fee along with additional charges for ongoing maintenance and future upgrades.
- Installation, updates, and data protection require a robust IT team.
- On-premise ERP suits large enterprises with strict compliance requirements or specific customisation needs.
Major Differences Between Cloud ERP and On-Premise ERP
Here’s a simple comparison to understand the major differences:
Advantages of Cloud ERP for the Manufacturing Industry
1. Low Initial Investment.
For MSMEs and mid-size manufacturing businesses in India, cloud ERP reduces the heavy upfront investment needed for servers and hardware.
2. Remote Accessibility
With operations often spread across multiple states, the ability to access ERP data anytime, anywhere is a big plus.
3. Automatic Updates
No need to worry about downtime or IT team availability. The vendor ensures smooth updates and upgrades.
4. Flexibility & Scalability
Cloud ERP can grow with your business. You can quickly add new plants, production units, or users if necessary
You can check out this insightful blog, “Cloud ERP vs. On-Premise ERP—Busting the Myths for MSMEs”, for a detailed take on common myths surrounding Cloud ERP and On-Premise ERP.
Advantages of On-Premise ERP for the Manufacturing Industry
1. Data Control
Some large manufacturers prefer to keep their sensitive data within their servers for maximum control.
2. Customisation
On-premise ERP can be heavily customised, as per your specific manufacturing workflow.
3. One-Time Cost
Although it is initially expensive, some enterprises prefer a one-time licensing fee instead of recurring subscription fees.
Which ERP Suits the Manufacturing Industry in India?
With a lot of SME (small and medium) manufacturing companies in India, cloud ERP has become more pragmatic because it is cost-effective, scalable, and simple to use. Pay-as-you-go works well for Indian businesses, which don’t like to make large initial investments but want the comfort of paying manageable monthly amounts.
But organisations that have strict regulatory and compliance rules, specialised workflows, and a dedicated IT department may still prefer on-premise ERP.
The right choice depends on:
- The size of your manufacturing business
- IT budget and infrastructure
- Future growth and expansion plans
- Data security requirements
Conclusion
Cloud ERP vs. on-premise ERP isn’t just about technology; it is also about aligning your ERP system to your business objectives. Cloud ERP offers more flexibility, cost savings, and low-maintenance benefits for the majority of Indian manufacturers who look at it, whereas on-premise ERP is best for companies that require granular control over data and enhancements.
If you are researching an ERP solution that is right for the manufacturing industry, then you can take a free demo of TejoERP and see how a cloud-based ERP can easily optimize your business operations. Contact Us If you have any questions or require personal help, feel free to contact us, and we will assist you in selecting the best ERP solution for your business.
Frequently Asked Questions:
2. Which ERP is better for manufacturing companies in India?
Cloud ERP is usually better for MSMEs and mid-sized manufacturers due to cost-effectiveness and scalability, while on-premise ERP suits larger enterprises.
3. Is cloud ERP secure for manufacturing businesses?
Yes, cloud ERP providers use advanced encryption and compliance measures to ensure data safety.
4. Why do some companies still prefer on-premise ERP?
Businesses that require full control over data, heavy customisations, or strict compliance regulations often choose an on-premise ERP.
5. What are the main benefits of cloud ERP in manufacturing?
Key benefits include lower upfront cost, remote access, automatic updates, and easy scalability.
6. Does cloud ERP work well for multi-location manufacturers in India?
Yes, cloud ERP is highly effective for multi-location operations since it provides real-time access from anywhere
7. How much does on-premise ERP cost in India?
On-premise ERP usually requires a high one-time licence fee, along with costs for hardware, IT staff, and ongoing maintenance.
8. Can small manufacturers afford ERP solutions?
Yes, cloud ERP is designed to be budget-friendly with subscription-based pricing, making it affordable for small manufacturers.
9. What should manufacturers consider before choosing ERP?
Key factors include budget, IT infrastructure, scalability needs, compliance requirements, and future growth plans.
10. Can ERP systems be customized for manufacturing workflows?
Yes, on-premise ERP is often more customised, while cloud ERP also allows certain configurations to suit business needs.
Author Bio:
Nikita Govili
Content & Technical Writer at ExpandX
Nikita Govil is a skilled content and technical writer at ExpandX, bringing a strong background in software engineering to her work. She began her career as a software engineer in a multinational corporation, where she gained hands-on experience in diverse areas such as software testing, documentation, and project management. This technical foundation allows her to craft clear, insightful, and impactful content that bridges the gap between technology and business. At ExpandX, Nikita combines her writing expertise with her technical knowledge to deliver content that informs, engages, and supports clients in the manufacturing and ERP domains.