Updated · Originally published
Choosing the right ERP software is no longer just a matter of selecting the right vendor like Microsoft vs. SAP vs Sage etc…. At one time, it was standard procedure to purchase licenses for software and then receive the installation disks in the mail. Nowadays, there are a multitude of delivery models. Not all vendors will support all of the options. Some may focus only on one. Therefore, the software you ultimately choose may greatly depend on the delivery model you prefer. The following are some of the major delivery models for ERP software:
1. On-premise - This is the traditional model that most ERP customers still use. In this model, you buy the software, and the vendor gives it to you (as download, or actual DVD/CD). You would then install the software on your own server and, if necessary, on individual computers/desktops.
2. Hosted - Assuming your ERP software requires a server to run, which most do, you may find it too burdensome to have your own server in-house. In such a case, many vendors or third parties will allow you to use their servers, located in secure data centers, to run your software. You own the software, but you pay them a monthly fee to run it for you. This includes doing all the backups, security, server maintenance etc…
3. Public Cloud - A public cloud ERP solution is one that is owned and remotely hosted by the vendor. In most cases, rather than licensing the software itself, you pay a subscription for the services they offer, which is a licensing model called Software as a Service (SaaS). You do not own the software in this scenario, you subscribe to it.
4. Private Cloud - This is more of a catch phrase than an actual technical term, but it refers to the concept of using the same tools a public cloud service would offer while hosting them on-premise. In some cases, the service provider may still manage and update the server remotely, as is the case with Windows Azure Platform appliances. This gives customers the flexibility to develop their own customizations and applications, while still having the benefits of a prepackaged SaaS solution.
5. Hybrid - A hybrid ERP solution is one that maintains on-premise software but also integrates a degree of cloud services. Microsoft refers to this as Software-plus-Service, and it is one of the major advantages of using Microsoft Dynamics products. A hybrid solution allows the customer to easily migrate from one delivery model to another without losing data or functionality.
When deciding on a delivery model, you should consider your current infrastructure: the number of servers you have, the size of your IT staff, the strength and reliability of your network, the geographical locations of your client computers, and the current software you are running for other business needs. You should also consider budget, as not every delivery model is equally cost effective in various situations.
Finally, features and usability should be your primary focus. Be careful not to settle for a less expensive solution that does not provide the features you actually need. Balance your need for certain functionality with your need to save money.
By ERP Software Blog Editors, Find a Microsoft Dynamics ERP Expert