For manufacturing companies, ERP software is not just another IT system-it is the operational backbone connecting production planning, inventory, procurement, quality, finance, and dispatch. Any downtime directly impacts the shop floor, deliveries, and customer commitments.
Over the past decade, many manufacturers adopted cloud infrastructure on our recommendation, assuming lower costs and better reliability. However, creeping AWS cloud costs, data security concerns, and ransomware incidents have forced a re-evaluation-especially for OurSys ERP where workloads are stable, data-heavy, and mission-critical.
This article presents a SWOT analysis comparing Cloud Infrastructure and In-House Servers for OurSys ERP.
1. Cloud Infrastructure for Manufacturing ERP - SWOT
Strengths
Faster deployment and lower initial cost
Manufacturers can roll out ERP without investing in servers, power backup, windows license, anti virus and firewalls - attractive for MSMEs and multi-plant expansions.
Remote access for distributed teams
Cloud ERP supports:
- Multi-location plants
- Sales offices
- Service engineers
This became especially relevant post-COVID when OurSys users were working from home seamlessly.
Built-in redundancy and uptime
Cloud providers offer high availability, backups, and disaster recovery that would be expensive to replicate in-house.
Easy integration with external systems
Customer portals, supplier integrations, BI tools, and IoT platforms are easier to connect in the cloud.
Weaknesses
Creeping and often hidden costs
For manufacturing ERP, cloud costs rise steadily due to:
- Continuous database growth (BOMs, routings, QC logs, production history)
- Large transactional volumes (MRP runs, stock movements)
- Backup storage and snapshots
- Data transfer (especially reports and integrations)
What begins as a low monthly cost can double or triple over 3-5 years, often exceeding the cost of owning servers.
Not optimised for stable ERP workloads
Manufacturing ERP usage is:
- Predictable
- 24x7
- Data-intensive
- Cloud pricing works best for variable workloads-not steady ERP transactions.
Dependency on internet reliability
Any network issue can:
- Halt production entries
- Delay material issues
- Block dispatch documentation
For shop-floor operations, this is a serious risk.
Limited control over performance tuning
Database and performance optimisation options are restricted unless premium services are used-adding to cost.
Opportunities
Scalability during seasonal demand
Cloud can support peak loads such as:
- Year-end closing
- Large MRP runs
- Audit or compliance reporting
Rapid plant rollout
New plants or warehouses can be brought online faster using cloud access.
Threats
Ransomware and credential compromise
In cloud ERP:
- A single compromised admin account can encrypt databases and backups
- Cloud speed amplifies damage
Long-term cost lock-in
Once data volumes grow, migrating ERP out of the cloud becomes expensive and risky.
Compliance and customer audits
Many compliances demand:
- Data ownership clarity
- Local data residency
- Restricted third-party access
Cloud hosting can complicate audit responses.
Cloud outages beyond manufacturer control
Even short outages can disrupt production planning and dispatch schedules.
2. In-House Servers for Manufacturing ERP - SWOT
Strengths
Predictable and controlled costs
Once servers are purchased:
- Costs stabilise
- ERP growth does not proportionally increase infrastructure cost
This suits ERP systems with long operational life cycles (10-15 years).
High reliability for shop-floor operations
Local servers ensure:
- Production continues even during internet outages
- Faster response for barcode scanning, shop-floor terminals, and QC entries
Full control over ERP data and IP
Manufacturers retain complete control over:
- BOMs and process know-how
- Costing structures
- Customer and vendor data
Better ransomware containment (if designed well)
With:
- Network segmentation
- Offline or immutable backups
Damage can be limited compared to cloud-wide compromise.
Weaknesses
Higher upfront capital investment
Servers, storage, power backup, and cooling require planning and budget approval.
Requires disciplined IT management
ERP uptime depends on:
- Regular patching
- Backup testing
- Hardware monitoring
Scaling needs foresight
Sudden capacity expansion is slower compared to cloud.
Disaster recovery setup costs
A proper DR site requires additional investment and planning.
Opportunities
Private cloud within factory premises
Using virtualisation and containers, manufacturers can get:
- Cloud-like flexibility
- On-premise cost control
Hybrid disaster recovery
Primary ERP on-premise with cloud-based DR offers cost-effective resilience.
Improved cybersecurity posture
Manufacturers can implement:
- Air-gapped backups
- Restricted ERP access
- Zero-trust internal networks
Threats
Ransomware via internal vectors
Phishing, USB devices, or outdated systems remain a risk if controls are weak.
Hardware lifecycle management
Servers need to refresh every 4-6 years.
Dependence on key IT personnel
Loss of experienced staff can impact system stability.
3. Ransomware Risk: Why ERP Is a Prime Target
Manufacturing ERP systems are attractive ransomware targets because they:
- Control production flow
- Store pricing, margins, and customer data
- Directly impact dispatch and billing
Key difference in impact:
- Cloud ERP -> Faster, broader damage if credentials are compromised
- In-house ERP -> Damage is usually localised if backups and access controls exist
Essential safeguards for manufacturers:
- Offline or immutable backups
- Multi-factor authentication
- Role-based ERP access
- Regular restore drills
- Segregation of ERP and office networks
4. Conclusion: What Works Best for Manufacturing ERP
For manufacturing companies, ERP workloads are stable, long-term, and mission-critical. The assumption that cloud is always cheaper or safer no longer holds true-especially with rising AWS costs and growing ransomware incidents.
Practical Recommendation:
- In-house servers for core ERP and production databases
- Static IP based
- Vendor / customer portals
- Remote access layers
This hybrid approach delivers:
- Cost predictability
- Shop-floor reliability
- Security control
- Long-term scalability
For manufacturers, the goal is not technological fashion-it is operational continuity, data protection, and cost discipline.