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If you’re on the fence regarding whether to implement a SaaS cloud ERP or an on-premise ERP, you’ll be glad to know there’s evidence to choose one over the other. The long-term cost savings of a cloud ERP outweighs the initial outlay required and allows you and your team to focus on growing your business rather than just maintaining it.

At first blush, it seems that SaaS (service as a software) cloud ERP models cost more than an on-premise, one-time purchase. When you factor in years of monthly payments, it appears that on-premise ERPs make more financial sense. But if you only compare initial investments with monthly payments, then you’re missing the bigger picture. On-premise ERPs come with a host of hidden fees and costs that can pile up over time – hardware maintenance and repair, software updates and fixes, labor costs, and more – while SaaS cloud ERP software offers significant cost savings.

How can SaaS cloud ERP cut costs?

Traditional, on-premise ERPs require extensive setup, maintenance, and monitoring that can drain the IT budget. However, ERP software shifts time and attention from these issues and allows companies to focus on innovation and development.

SaaS cloud ERPs in general, and the right ERP system in particular, can save companies money; here are some of these cost savings:

SaaS cloud ERPs reduce overhead: If your company decides to host an on-premise ERP, then you’ll have to pay the costs associated with building, maintaining, and securing your data center. Your IT team will spend hours working on repairing old or outdated hardware, servicing servers, and ensuring that all firewalls and security measures are in place. Each one of those hours will add up in labor costs – not to mention the money you’ll spend on the physical space for the data center, including electricity, cooling, and security.

With ERP software, your company no longer handles the cost or responsibility of maintaining a data center, and the time your IT team would’ve spent on upkeep can now be devoted to more useful tasks. In fact, a 2014 study by Computer Economics that surveyed seven companies that had either completely moved or largely moved to a cloud ERP system, found that these businesses saved, on average, more than 15% in IT spending. What could you do with those savings each year?

SaaS cloud ERPs automatically update: One of the major headaches associated with an on-premise cloud ERP is the need to shell out money for the newest updates and bug fixes to the software. What’s worse, these updates are crucial for the health of your business – if you don’t pay for the upgrade, your software will quickly lag behind.

But SaaS cloud ERPs take the pain out of updates and save companies money by including them in the monthly cost. Instead of constantly servicing an ERP system that’s slowly going out of date, you’ll have instant access to the latest technology as the cloud provider regularly replaces and updates their data center and ERP software.

SaaS cloud ERPs eliminate upfront costs: The upfront cost of an on-premise ERP system can make a severe dent in your company’s capital and restrict you from pouring cash into other parts of the business. But with a SaaS cloud ERP, the low initial investment means that companies (especially small and medium-sized businesses) can benefit from the essential insights, information, and features of an ERP system without breaking the bank, and will still be able to invest in other departments from the outset.

SaaS cloud ERPs provide scalability: One of the advantages of the SaaS cloud ERP model is flexibility—when paying month to month, companies can easily add or remove users as their company shrinks or grows, thereby paying only for the licenses they need. With an on-premise ERP, you may be forced to guess how many licenses you’ll need over the next few years, then scramble to adjust when your estimates are too high.

SaaS cloud ERPs integrate easily: It’s easy to integrate with SaaS cloud ERPs, and with the mobility and instant accessibility of the cloud; your company’s data automatically syncs between mobile devices and the home office. Integrations – for credit card processing, your CRM or HR management, or marketing automation, to name a few – can save you time and money by automating processes that were previously manual.

Let cloud ERP save you time and money

The world of ERPs can be confusing and sometimes overwhelming, and it may be difficult to discern the best fit for your business. With a SaaS cloud ERP, you can rest assured knowing that your ERP system can change with you, adapting as needed, and can save you money over the lifetime of the product. When you don’t have to maintain data centers or pay for IT labor hours, regular software updates, and bug fixes, you can save a lot of money that can go toward more important initiatives instead.

SaaS cloud ERPs are the best option for cutting costs long-term. If you’re not sure how – or how much – a cloud ERP system can help you save, contact us and we’ll go over exactly what it could look like for you and your company.