Closing your books in a timely manner is not just essential for meeting reporting deadlines, but also for enabling faster and more strategic business decisions. However, manual tasks are still slowing down these important processes.
According to a recent Sage study, 92% of accounting professionals surveyed in 2024 agree they spend too much time on manual tasks, and 89% believe automation would free up more time. Unfortunately, only 37% have actually started automating processes.
These results indicate that most finance leaders recognize the need to upgrade their accounting software to an enterprise resource planning (ERP) solution, such as Sage Intacct, to help automate their closing process; however, the decision between cloud-based and on-premise ERPs may be delaying them.
In this article, we will cover the features and costs of both options, along with common concerns and industry-specific considerations.
On-premise Enterprise Resource Planning (ERP) Platforms
Historically, most organizations have relied on on-premise ERP accounting software to handle bookkeeping, invoicing and other financial management functions.
On-premise ERP software is installed and runs on the organization’s own servers or computers. This gives the business more control over the platform but also means that the organization and its IT professionals — if they have them — are responsible for maintaining the software, including updates and backups.
Cloud-based ERP Solutions
Cloud-based ERP solutions are hosted on secure, remote servers and can be accessed anywhere through the internet. The organization does not have to worry about maintaining the platform, as the software provider handles all the updates and backups.
For example, cloud ERP accounting platforms, like the various Sage solutions, are operated by a third party on distributed computing architectures. Businesses can then use Sage to access their ERP remotely.
Cloud ERPs vs. On-premise ERPs: Comparing Features and Costs
Features Breakdown
When comparing cloud-based ERP accounting solutions to their more traditional counterparts, it’s important to consider both of their features. Make sure to take the following into consideration:
- Elastic Scalability: Cloud-based systems automatically adjust computing resources based on the business’s needs. That means, during month-end close — when everyone's running reports simultaneously — performance stays consistent. If you need more power with an on-premises system, you’ll need to think about hardware purchases, installation downtime and capacity requirements.
- Automatic Updates and Maintenance: Cloud users get major feature updates annually without downtime, compared to traditional ERPs with 18 to 24-month upgrade cycles that require IT projects and budget approvals. According to Aberdeen Group research, companies using on-premise accounting systems allocate 28% more IT resources to routine maintenance versus strategic projects.
- Built-in Integration Capabilities: Applications like Sage X3 connect with over 200 business applications out of the box, eliminating the custom coding that is required for on-premise implementations. You should also ensure whatever ERP platform you choose allows for:
- Automated Data Flow: Connect your accounting system with sales, inventory and operational systems to eliminate 65% of manual data entry and virtually eliminate reconciliation errors.
- Unified Reporting: Generate consolidated financial reports across multiple entities, departments or locations without the spreadsheet gymnastics that plague on-premise environments.
- Advanced Analytics Access: Built-in business intelligence tools provide real-time dashboards, variance analysis and predictive modeling without additional software investments.
- Security: Cloud ERPs often invest in cybersecurity infrastructure and teams of security specialists. They also offer data replicas across distributed centers to ensure business continuity with recovery times under two hours, compared to the 24 – 48 hour window typical of on-premise ERP disaster recovery.
- Compliance: For cloud ERPs, SOC 2 Type II, ISO 27001 and other industry-specific certifications are maintained automatically, reducing your compliance burden and audit preparation time. This is particularly crucial for businesses in regulated industries, such as government contractors, healthcare organizations and financial services firms. Businesses with on-premises ERPs will have to make manual adjustments instead.
Costs Breakdown
Besides comparing the features of on-premise and cloud ERPs, it is just as vital to evaluate the costs:
|
On-premise ERPs |
Cloud-based ERPs |
|
|
Software Costs |
$75,000 – $250,000 | Monthly subscription costs will vary based on actual usage |
|
Hardware Costs |
$25,000 – $100,000 | No hardware investments required |
|
Implementation |
$50,000 – $150,000 | $10,000 – $150,000 |
|
Maintenance |
18% – 22% of initial investment |
Included in the cost of the subscription |
But here's where it gets interesting. A 2023 Nucleus Research study found that organizations transitioning from on-premise to cloud environments achieved 34% cost reductions over three years, factoring in total cost of ownership. The savings come from three key areas:
- Eliminated Infrastructure Costs: No more server rooms, backup systems or hardware refresh cycles.
- Reduced Personnel Requirements: Your IT team can focus on strategic initiatives instead of system maintenance.
- Improved Operational Efficiency: Automated processes and better integrations reduce manual work across the finance team.
When To Choose a Cloud ERP vs. an On-premise ERP
Choosing between a cloud-based and an on-premise ERP depends on your organization’s unique needs, resources and long-term goals. Below are some scenarios where each deployment model shines, helping you determine which option may be the best fit for your business.
Cloud ERPs Make Sense When You:
- Experience Growth Spurts: Seasonal businesses, rapidly expanding companies or organizations planning acquisitions benefit from elastic scalability
- Need Multi-location Support: Managing multiple entities, subsidiaries or international operations from one system
- Want Integration Flexibility: Connecting with modern CRM, e-commerce or operational systems without extensive custom development
- Lack Deep IT Resources: Smaller technical teams that need to focus on strategic initiatives rather than system maintenance
On-premise ERPs Might Work If You:
- Have Unique Compliance Requirements: Highly specialized regulatory needs that cloud providers haven't addressed (increasingly rare)
- Made Recent Infrastructure Investments: Substantial sunk costs in hardware that haven't been fully depreciated
- Require Air-gapped Systems: Security requirements that mandate completely isolated environments (mainly government/defense contractors)
Industry-specific Considerations for On-premise ERPs vs. Cloud ERPs
For Nonprofits and Government Contractors
Cloud-based financial management and ERP solutions offer numerous benefits to not-for-profits and government contractors. These systems provide real-time data, enabling sectors to quickly make strategic decisions that impact performance and mission goals.
Specifically, cloud solutions like Sage Intacct excel at fund accounting, grant management and compliance reporting. The ability to track restricted funds, generate automated compliance reports, and manage complex approval workflows makes cloud platforms particularly valuable for nonprofit and government sectors.
This automation saves organizations time and reduces the risk of errors, which is especially helpful for not-for-profits and government contractors who face staffing challenges in their accounting and finance functions.
For nonprofits, Sage Intacct also offers advanced functionality to automate and streamline processes down to the specific nonprofit industry sector, from foundations to faith-based organizations, nonprofit healthcare and education.
For Manufacturing Companies
Cloud ERP solutions, like Sage X3 empower manufacturers with real-time inventory costing, work-in-progress tracking and integrated supply chain management that on-premise solutions struggle to match. The cloud deployment means you can scale manufacturing operations without IT infrastructure concerns.
For example, a Cherry Bekaert client in manufacturing recently connected their Sage X3 system with their production planning software. The result? Automated cost allocation, real-time work-in-progress reporting and project profitability analysis that previously required a full-time analyst to compile manually.
For Healthcare Organizations
Cloud ERP solutions for healthcare organizations deliver more than just HIPAA compliance and billing. They integrate clinical, administrative and financial data, enabling healthcare providers to make informed decisions and optimize operations. These platforms connect seamlessly with electronic health records, supply chain and payroll systems, reducing manual work and improving accuracy in reporting and patient billing.
Additionally, cloud ERP streamlines multi-location management and provides data security with automatic updates and compliance monitoring. Patient billing becomes more transparent and efficient, while healthcare organizations gain flexibility to adapt quickly to new industry requirements, all without the infrastructure burdens of traditional systems.
For Construction Companies
Cloud ERP systems, like the various Sage construction softwares, offer significant advantages to construction companies by simplifying project costing, budgeting and billing. These platforms enable real-time tracking of expenses against budgets, facilitate efficient collaboration through integrated document management, and provide mobile access for field approvals and updates. Additionally, cloud ERP streamlines change order management and subcontractor coordination, reducing delays and errors.
With consolidated dashboards, construction firms gain instant visibility into project progress and financial status, while automated compliance reporting and secure documentation help ensure regulatory adherence. The scalable and low-maintenance nature of cloud ERP allows construction companies to adapt easily to changing workloads and expand without heavy IT investments.
Cloud vs. On-premise ERP Accounting Software: Frequently Asked Questions
Cloud implementations usually complete 40% – 60% faster than on-premise projects. Most mid-market organizations go live within three to six months, compared to six to 12 months for on-premise systems. The difference comes from pre-built integrations, automated data migration tools and standardized implementation methodologies.
Yes, modern cloud platforms like Sage Intacct are specifically designed for complex organizational structures. They handle multi-entity consolidations, inter-company transactions and currency translations more elegantly than most on-premise solutions, often with better performance and easier maintenance.
Reputable cloud accounting providers offer data export capabilities and transition support. Your data remains accessible in standard formats, and most platforms provide API access for data extraction. This flexibility often exceeds what's available with on-premise systems.
Cloud platforms automatically scale computing resources during high-demand periods, maintaining consistent performance when on-premise systems often slow down. This elastic scalability means your month-end processes can actually run faster in the cloud than on dedicated hardware.
The main cost considerations are user licensing, data storage for large historical datasets and premium support options. However, these are typically transparent in pricing models, unlike on-premise systems, where hardware refresh, disaster recovery and maintenance costs often surprise organizations.
Complex data is exactly why you need cloud infrastructure. Cloud platforms handle multi-entity consolidations, international currencies and complex reporting requirements better than most on-premise systems. The key is proper data cleansing and migration planning. Most organizations discover data quality issues during migration that, once resolved, actually improve their reporting accuracy and operational efficiency.
Modern cloud platforms offer extensive customization through configuration rather than coding. Sage Intacct, for instance, allows custom fields, workflows and reporting without touching the underlying code structure. This approach provides the flexibility you need while maintaining upgrade compatibility — something traditional customizations often break.
Cloud platforms are designed with offline capabilities and mobile access that often exceed on-premise reliability. Most modern implementations include redundant internet connections and mobile apps that sync when connectivity is restored.
Your Next Steps: Building a Scalable Financial Foundation
The choice between cloud and on-premise accounting isn't just about technology — it's about positioning your organization for sustainable growth. Cloud solutions, like Sage Intacct and Sage X3, provide the scalability, integration capabilities and operational efficiency that modern businesses require to stay competitive.
If you're ready to move beyond the limitations of your current system, Cherry Bekaert's Technology advisors can help you navigate the transition. We'll assess your current environment, identify optimization opportunities and develop an implementation strategy that aligns with your growth objectives.
