Comparing Cloud ERP vs On-premises ERP for Pharma Companies

On November 17, 2022

The pharmaceutical industry is experiencing a paradox between growth in scientific progress and actual innovation output. On one hand, the pharmaceutical, biotech, and medical device industries have been staggering growth over the last few decades: Pharma companies spend 17% on their research and development (R&D), which is expected to reach $203 billion by 2024.

But despite this investment, pharma faces an innovation crisis. The rising complexities of disease, growing attrition rates of pharma R&D projects, longer development requirements for new products, and the increasing costs for new drug approvals all inhibit growth. While there is no panacea for this multi-layered industry challenge, the right technology to manage business operations is as close to a magic pill as the industry can get.

Enterprise Resource Planning (ERP) systems can transform pharma companies by helping them boost innovation outputs and future-proof their success, but companies have a choice when they opt for ERP systems: on-premises or cloud-based technology? Each have their advantages and disadvantages, which we compare here for your easy reference.

On-premise ERP for Pharma

  • Security. An on-premises ERP system ensures complete control over the company’s data.
  • Compliance. On-premises ERP can help companies meet strict compliance regulations, like those of pharma.
  • Customization. Your on-premise ERP will be tailored to meet the specific needs of your organization.
  • Costs. On-premise ERP systems require significant upfront investments and ongoing maintenance and support costs. The license per user can go up to $7,000 without including the costs of networking, server and workstation hardware and software, installation and integration, or data migration.
  • Access. On-premise ERP cannot be accessed from anywhere—limiting how you work in today’s work-from-anywhere era. You will not be able to support real-time collaboration if you want to exchange information quickly and speed up your decision-making process.
  • Scalability. You can’t make changes to an on-premise ERP system without the help of an IT team—adding costs any time you want to scale.
  • Maintenance. Your IT staff is in charge of maintaining and updating your on-premise ERP system. Not only does this add burden to staff, it introduces potential downtime for other employees as IT performs upgrades. Your ERP also becomes outdated sooner because on-premise software is usually released just once a year.


Cloud-based ERP for Pharma

  • Security. It’s a common belief that data stored in the cloud is less secure, which has since been debunked. A cloud-based ERP system is actually safer than an on-premise one because cloud providers like Microsoft have stricter security protocols than any pharma company could implement on their own. Cloud ERP’s security features include access controls, data encryption, and server-based processing. The cloud also enhances your visibility and control of all business processes and stored data.
  • Compliance. You might think you have to buy additional compliance modules if you go with the cloud ERP option, but that’s typically untrue. The cloud offers dynamic compliance—something that adds complexity to on-premise systems but is easy in the cloud. A cloud ERP can also increase quality control and product traceability—requirements for highly regulated environments like pharma.
  • Customization. It’s widely thought that the cloud isn’t as customizable as an on-premise solution, but with the right IT partner, this belief becomes myth. You can fully tailor your solution to the needs of your company—taking in all requirements, including centralized processes, monitoring data, complex supply chains, and more.
  • Costs. In the cloud, you replace your annual licensing fee with pay-as-you-go subscription models. Some studies show that cloud systems deliver an average of around 40% in total IT cost savings. There are no high upfront investments or ongoing needs to buy more licenses and hardware when you scale.
  • Access. With a centralized platform for data storage and sharing, cloud ERP makes it easier for pharma companies to collaborate and exchange ideas. Anytime, anywhere access empowers remote workers and teams in different locations to work together. They can make changes, exchange insights in real-time, and respond quickly to changing market conditions and customer needs.
  • Scalability. Cloud ERP solutions are designed with scalability in mind—you can easily add users and functionality as your business grows.
  • Maintenance. You’ll reduce the IT burden on your staff when you opt for the cloud. The vendor takes care of system maintenance and upgrades. You’ll also always have the latest version of the software since updates are automatic. You will often be able to take advantage of new features and functionality sooner than if you use on-premise.

Which Will You Choose?

There are many moving parts to consider and configure when implementing an ERP system into your pharma company. AX for Pharma understands your industry’s specific requirements well and how to tailor your solution to your organizational needs. Here’s what one of our customers said:

“We chose AX for Pharma 365™ because we needed a system that was fully vetted and would allow us to quickly turn on individual functionality as we needed them, so that we could keep pace with the science that we’re doing,” – Matt Coultas, Associate Director of Operations for INOVIO (biotechnology company)

In our digital-first world, cloud options are becoming paramount for organizations that want to speed up the process of innovation. Pharma companies that have adopted cloud ERP are well-positioned to reap the benefits of their investment in new drugs and therapies.

Reach out if you want to learn how to accelerate growth and innovation outputs for your organization.