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This question is to help me understand which of the two choices is more attractive for my thesis.
in my opinion ofcourse Cloud based is the best choise for SME Companies, because:
Traditional commercial software is often expensive. First you have to pay to license the software, then pay for hardware to run it, then pay again for the software to be customized, and finally pay regularly for maintenance and support. Furthermore, because the source code is not available, commercial software could be very difficult to customize to meet the users’ actual needs. This combination of high cost and lack of flexibility is pushing some CIO’s to look for greener pastures.
Open source addresses both of these issues with a once novel but now familiar approach. The software is available free of charge, and the source code is also available so the user could modify it to fit their needs. The user just has to pay for the hardware and any customizations he needs, so the cost to acquire the software is significantly lower. Most importantly, the user has the flexibility to modify and use the software according to his needs.
Cloud-based software takes a different approach. The user pays a recurring fee to use a cloud-based application. In return, the cloud vendor provides both the hardware and software as a package. Cloud-based applications themselves are highly standardized, and you don’t get to see the source code. However, they usually provide APIs for building third-party add-on modules. This way, cloud vendors (try to) provide flexibility via a better technical architecture, rather than by freeing the code.
Clearly, people like this model. Consider two cases in point:•Salesforce.com has grown to over a million users•Google Apps has signed up over two million businesses
This begs the question: Why are cloud-based applications so successful? Because they have made it easy. Even though open source software is free, you still have to get the hardware and then set up and possibly customize it. Cloud software vendors have taken care of all that for us, so we just have to show up with our browsers. For most users who don’t have very specialized needs, that convenience is far more important than having the source code.
Agree with Mostafa Abdo and Mohammad Tohamy Hussein's answers
I would say cloud based ERP, of course.
It provides for the those small and medium enterprises: application scalability and reduced hardware costs, without having to manage hardware, software, and upgrades.
Not to forget the high level security and ensured privacy, in addition to an easy accessibility and integration.
Open source ERP provides less initial investment. Its main disadvantages are:
- Lack of formal effective training in most cases (if not all).
- Lack of commitment to develop the product to maintain competitivness in today cahnging and evolving business needs and operational effectivness technology.
- High cost of development. Given the previous point, you may find yourself in a position where you need to do your own development.
- You may still find that you need to do do your own development to maintain your competitive advantage through automating the business processes which differntiate you from your comppetitors.
- Since you are not a software developer (a stand alone industry in its own right where it is not just programmers), you will almost always suffer poor quality of developments outligned in the two previous points, which will increase your operating costs.
- In case you perform any in-house development, you may face deeper issues if and when you decide to upgrade your ERP to a next version.
Cloud based ERP again offers less initial investments in the licenses part of the cost structure. Other companents of the cost structure like taining & consultancy will probably be the same as it is for in-house ERPs. It's main disadvantages for the time being are:
- Lack of reliable communication infrasturucture and bandwidth in some parts of the world.
- Lack of trusted security measures to ensure privacy of the business data (a major compay asset and competitive advantage) especially after the latest scandle of NSA accessing Internet technology companies databases.
Based on the above, I still prefer the in-house ERP choices.
ERP on the cloud or SAAS Software As A Service is currently promoted by tire one application partners as it does require strong resources to manage load distribution and service availability with0 downtime, the topic is more attractive in general but if we speak about targeting SME segment then we should pick the more cost effective open source ERP, cloud at present is not an economical candidate.
Another parameter is business maturity and stability, open source is more suitable to adopt in the dynamic phase of business life cycle mold and cast as per frequent diversity, and nevertheless open source needs in-house dedicated development resources to do the alteration.
Cloud main attraction point is releasing the organization from IT overhead and managerial effort, this ROI is not very significant in SME vs. Mega Enterprises where a real tangible savings occur by moving to the cloud.
A) You can’t compare open source ERP by cloud based ERP, because they are not the same concept lets start by defining open source ERP.
Open source ERP is a legally free to use without warranty or installation or configuration and it could be installed in the cloud or in any local machine.
Cloud based ERP is an ERP that is not installed in your local machine this ERP can be accessed only if you have internet connection and it could be open source
SMEs drive innovation and growth:99% of the economy consists of small and medium-sized companies that together employ over60% of the country's workforce. Especially in manufacturing, many companies have become "hidden champions", in other words the global market leaders in their niche. But many businesses have failed to suitably adapt their IT systems to their dynamic development.Cloud-based ERP solutionsappear to provide a number of benefits related to sizable cost savings and competitive advantage en-hancements. It has also been stated that the cloud-based enterprise systems are more suitable for smalland medium enterprises, primarily because of the subscription based pricing schemes that typically re-quire significantly lower upfront investments
In house ERP better then cloud based ERP, there is minor security risk and its fast to use.
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