Types of ERP Deployment: Cloud, On-Premise, and Hybrid Complete Guide

Israr Ahmed

May 27, 2025 • 8 min read

Understand cloud, on-premise, and hybrid ERP deployments. Learn which setup fits your business goals, team size, and infrastructure best.

Types of ERP Deployment: On-Premise vs Cloud vs Hybrid

When a business decides to implement an ERP system, one of the first decisions to make is how it will be deployed. In simple terms, ERP deployment refers to where the software will be hosted and how your team will access it—whether it runs on your own company servers, through the internet (cloud), or a mix of both.

There are three main deployment types: On-Premise, Cloud-Based, and Hybrid. Let's break them down clearly.

On-Premise ERP

What it means: Your ERP system is installed and managed on your company's own servers and hardware, usually at your office or a private data center.

How it works: You purchase a software license, install it on your computers, and manage everything from data backups to updates yourself or through your IT team.

Why businesses choose it:

Full control over your data and infrastructure
You already have a strong in-house IT team
You operate in industries with strict data compliance or regulations

Example: A government agency with sensitive data runs its ERP on-premise to meet strict privacy laws and avoid third-party cloud risks.

Pros:

Total data ownership
Customizable to your exact needs
No ongoing subscription fees

Cons:

High upfront cost (hardware + setup)
IT maintenance burden
Less flexibility if you grow or downsize

Cloud-Based ERP

What it means: Your ERP system runs on the cloud servers hosted and maintained by the software provider. You access the system through the internet.

How it works: You pay a monthly or yearly subscription fee. The provider handles all the hosting, security, updates, and support.

Why businesses choose it:

You want to get started quickly
You don't have (or want to build) an IT team
Your team works remotely or from multiple locations

Example: A growing e-commerce brand uses a cloud ERP to manage inventory, sales, and customer orders across all its online stores without worrying about IT setup.

Pros:

Lower upfront costs
Easy to scale up or down
Accessible from anywhere with internet
Regular updates and maintenance handled for you

Cons:

Ongoing subscription cost
Limited control over server infrastructure
Internet connection is crucial

Hybrid ERP

What it means: A combination of both on-premise and cloud deployment. Some parts of your ERP system are hosted locally, while others run in the cloud.

How it works: For example, you might keep sensitive financial data on-site but use cloud modules for HR or customer support.

Why businesses choose it:

You want the flexibility of cloud but need to keep certain data local
You're transitioning gradually from on-premise to cloud
You want a tailored solution without going fully one way or the other

Example: A healthcare organization uses on-premise ERP for patient records and billing, while its mobile workforce accesses cloud HR and project tools.

Pros:

Best of both worlds
More flexibility with customization
Gradual transition possible

Cons:

More complex to manage
Requires syncing between systems
Can be more expensive than choosing one model

Which ERP Deployment Is Best for You?

Here are a few quick questions to guide your decision:

Do you need quick setup and access from anywhere?

→ Cloud ERP

Do you require full control over your data and systems?

→ On-Premise ERP

Want flexibility while keeping certain operations in-house?

→ Hybrid ERP

Also consider:

Your available IT support
Data sensitivity and security needs
Budget and long-term growth plans

Final Thoughts

ERP deployment isn't one-size-fits-all. The best choice depends on your current setup and future goals.

Start simple if you need to. Many businesses today begin with cloud ERP and adapt over time. What matters most is choosing a solution that supports how your business works—and grows.

Share this article