Cloud ERP and On-Premise – What is the Difference?

  • The growth of cloud ERP in manufacturing is approximately 5%, with Financial Management Systems (FMS) and Human Capital Management (HCM) growing at 7% and 10%, respectively.
  • The worldwide ERP market grew 9% last year, reaching $39 billion according to Gartner’s latest market estimates.
  • Despite an overabundance of hype surrounding cloud ERP, Gartner estimates its global market size at 30% of the worldwide ERP market or approximately $11.7 billion in annual revenues.
  • Cloud MES delivers the greatest value at manufacturers with complex multisite requirements, deep integration expertise with Cloud ERP, and advanced knowledge of cloud platform tradeoffs.

MES Success Depends On Getting ERP Implementations Right

Getting business value from an ERP system depends on how well it delivers a 360-degree view of the shop floor, making MES integration a must-have for completing and delivering orders in real-time today.

Choosing between on-premise, Hosted Managed Services (HMS), or cloud ERP deployment options  has a direct impact on how well the following foundations of an MES system operate and deliver value:

  • Real-Time Planning and Scheduling. MES systems deliver the greatest business value when they can successfully manage industry-specific attributes for planning and control, schedule across alternative work centers with drag-and-drog interfaces, optimize machine scheduling, and support advanced BOM functions including Mfg. type, cells, tooling, and MRO, Finite Scheduling and more.
  • A multisite shop floor control system integrated into the planning engine of an ERP system. Many manufacturers consider this the heart of their MES system. And many are either relying on real-time production and process monitoring today or plan to in the future. Real-time process and production monitoring aim to monitor machines closely for better process control, quality, reduce creation, track SPC at tighter intervals, and improve Overall Equipment Effectiveness (OEE).
  • MES Production Reporting Needs ERP-generated real-time data to work. Manufacturers want real-time reporting, the flexibility of changing production schedules on the fly, real-time inventory visibility, and a real-time stream of shop data from workstations, Warehouse Management Systems (WMS), track-and-traceability, and lot tracking. When MES and ERP are integrated, backflushing, production reporting, labeling, and inspections – all key elements of MES production reporting –  are made more accurate.
  • Quality Management needs real-time ERP integration if it’s going to make a difference. When quality management systems have real-time integration into ERP systems, manufacturers know the cost of good and bad quality, can identify quickly how specific manufacturing events are impacting quality, know the financial costs of quality decisions, track SPC more effectively, and best of all, give everyone more ownership over quality management.  Gage and Device management provide useful data on how to configure work cells – another reason why quality management, MES, and ERP all need to have real-time integration.  

On-Premise Verus Cloud ERP

IoT Analytics’ recent report summarized in the blog post, Cloud MES: How manufacturing software is migrating to the Cloud makes a compelling case for why MES is moving to the Cloud. IoT Analytics is a leading provider of market insights for the Internet of Things (IoT), M2M, and Industry 4.0.

Their study found that 29% of manufacturers from a recent survey indicated they are moving their MES systems to the Cloud in the next two years. The study also predicts the Cloud MES market will reach an estimated value of $2.34 billion by 2026. The following graphic from the study highlights cloud migration over the next two years for ERP, PLM, CMMS, MES/MOM, and SCADA.  

Cloud ERP and manufacturing software
IoT Analytics, Cloud MES: How manufacturing software is migrating to the cloud Source:

MES Succeeds When It Puts Business Needs First

Choosing between on-premise, Hosted Managed Services, or Cloud needs to be based on the needs of the people most dependent on the data MES systems provide. Providing each of the following personas with actionable information in real-time is ideal. Selecting the best deployment model needs to put these persona’s MES-based information needs at the center of the deployment decision. Think of these personas as the customers for the MES system internally. Please click on the graphic to expand for easier reading.

Selecting The Best Deployment Strategy To Develop Your Manufacturing Business

The study’s findings underscore how important it is to get ERP implementations right by selecting a deployment strategy that drives business results.  Based on the lessons learned from decades of serving manufacturers, DELMIAworks provides three alternative deployment options. They include on-premise ERP, Hosted Managed Services (HMS), and Cloud-based ERP.  

When manufacturers consider deployment options for an ERP system, we believe in giving them the freedom to choose. From on-premise ERP to Cloud Hosted ERP via hosted managed services to Cloud ERP delivered via Software-as-a-Service (SaaS), DELMIAWorks is committed to giving manufacturers flexibility to excel in reaching their growth goals. The following graphic compares deployment options:

Cloud ERP hosting options
Benefits of investing in an MES Solution

Louis Columbus

Louis is currently serving as DELMIAWorks Brand Senior Marketing Manager. Previous positions include Director Product Management at Ingram Cloud, Vice President Marketing at iBASEt, Plex Systems, Senior Analyst at AMR Research (now Gartner), marketing and business development at SaaS start-ups.