SaaS ERP vs. Cloud ERP: What’s the Difference?

Organizations need to manage multiple systems to function well, and that’s where ERP comes in. Some people mix up cloud ERP and Software-as-a-Service (SaaS) ERP. While they share similarities, there are distinctions between them. In this article, we will identify the differences between Saas ERP vs. Cloud ERP.

A recent guide by Forrester, written by Duncan Jones, talks about how ERP vendors struggle to meet modern organizations’ needs. Forrester’s data shows that many enterprises plan to replace or complement their ERP software with SaaS applications.

Both cloud and SaaS ERP work online and involve a vendor or service provider. They also take less time to integrate compared to on-premise ERP. In this article, we will explain what cloud ERP and SaaS ERP are, and highlight their benefits and differences.

What is Cloud ERP?

Cloud ERP is a type of business software that manages company data. Unlike traditional ERP systems, cloud ERP is stored and accessed through the internet. This allows businesses to work with external partners and customers easily.

Using a cloud ERP service offers several unique features:

Simplified Information Sharing

The internet lets us send data far away, and the cloud helps organizations quickly exchange files and information with others, even if they’re not in the same group or company.

Lesser Hardware and Software Issues

If your business is flexible and doesn’t want to spend too much time on IT issues, using local data storage means you have to handle all software problems. But if you keep everything on a cloud service like AWS, you still need some IT management, but you can outsource the problems instead of dealing with them internally.

Effortlessly Stay Up-to-Date

Cloud ERP software helps you keep up with new methods and technologies as they come along. These systems are likely to get updates and new features over time.

Cloud ERP Perks

Cloud ERP is popular because it has many advantages over on-site ERP:

  • Cost Savings: It’s cheaper because you don’t have to buy hardware upfront.
  • Quick and Easy Setup: It’s faster and easier to set up.
  • Secure Access: You can access your business data securely from anywhere using any device.
  • Reduced IT Staff: You need fewer in-house IT staff to manage the system and hardware.
  • Reliability: It offers better uptime and availability because it’s hosted in advanced data centers.

Cloud ERP Curveballs

Cloud ERP can have drawbacks for certain companies, such as:

  • Difficulty moving data from on-site ERP systems.
  • Limited control over data backup and security, handled by the cloud provider.
  • Challenges with security and regulations when storing and accessing customer data, including compliance issues like HIPAA, PCI-DSS, and GDPR. Some cloud vendors do have built-in solutions, though. There are also concerns about keeping data within a specific country’s borders.
  • Less freedom for system customization, although many cloud ERP providers do offer flexibility that meets the requirements of most businesses.

What is SaaS ERP?

SaaS ERP is a cloud-based software that you pay for on a monthly basis, per user. It works online and is run on the provider’s servers, getting updated every three months.

The main advantage of SaaS ERP is its simplicity and the fact that the provider takes care of updates. However, it doesn’t offer much customization. It also enhances system security and reduces IT expenses.

ERP SaaS benefits organizations looking to grow without needing extra IT resources or infrastructure. As the organization expands, the SaaS solution can easily adapt to meet new needs.

SaaS ERP Perks

SaaS ERP has become really popular lately because it’s better than traditional on-site ERP systems in several ways:

  • Cost-Effective: It’s cheaper and more predictable because you pay for what you use, and it’s an operating cost, not a big upfront expense. You only pay for the users and access you need.
  • Ready-to-Use: It comes with great features for various business needs like accounting, HR, supply chain, and customer management, right from the start.
  • Easy to Scale: You can easily add or reduce users as your business grows or changes. No need to buy more hardware.
  • Automatic Updates: It updates itself, saving you time and effort. You always have the latest features without the hassle.
  • User-Friendly: It has a modern and easy-to-use interface, making it simpler for people to use and understand the system.
  • Other Benefits: You can access it from any device, it’s quicker to set up, and it’s more secure and reliable than what most businesses can create on their own.

SaaS ERP Curveballs

SaaS ERP has many benefits for companies, but there are some drawbacks:

  • Limited customization options, although most SaaS ERP providers offer enough configuration for most companies needs.
  • Security might not meet the strict standards of certain organizations, especially government or highly regulated markets.
  • Costs go up as more users are added, and they can rise fast if not managed carefully.

Cloud ERP vs. SaaS ERP: Choose Your Best Fit

Cloud ERP is a suitable choice for businesses with a distinctive business model that necessitates precise control over ERP customization. Opting for a single-tenant web-based ERP enables organizations to enjoy certain advantages offered by cloud ERP, such as enhanced mobility, seamless connectivity with business partners, and reduced IT costs.

On the other hand, SaaS ERP is an ideal solution for organizations that don’t need extensive customization. Since it is entirely managed by the provider, SaaS ERP comes with configuration options tailored to meet the requirements of most customers within the provider’s target industry.

Take a look at the top 14 ERP systems in 2023.


Agile businesses seeking enhanced customization and control can explore Cloud ERPs, whereas startups can find significant advantages in using preconfigured SaaS ERPs. It is essential for organizations to conduct thorough research to determine the most suitable provider for their specific business requirements.

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