The Shift to Hosted ERP: Benefits and Considerations

In today’s digital-first landscape, businesses are reassessing how their core systems are deployed and maintained. Many organisations are now actively investigating and then opting for a hosted ERP system deployment.

Whether you’re running a legacy ERP or looking to offload IT infrastructure costs and maintenance, hosted ERP offers a compelling alternative to on-premises deployment. This article explores the key benefits of hosted ERP, as well as critical considerations businesses should evaluate before making the transition.

What is Hosted ERP?

Hosted ERP refers to an enterprise resource planning system that is installed on servers managed by a third party, rather than being run on internal, on-premises hardware. While the software itself may be the same as a traditional ERP solution, hosting it externally provides new levels of flexibility and efficiency.

This model allows businesses to retain the customisation and control of on-premises software while benefiting from external hosting infrastructure, such as private cloud, virtual machines or dedicated servers.

Benefits of Moving to a Hosted ERP System

Reduced Infrastructure and Maintenance Costs

Hosting removes the burden of maintaining on-site servers, backup systems and cooling or power supply infrastructure. With your ERP hosted in a secure data centre or private cloud environment, your internal IT team can focus on strategic initiatives rather than routine maintenance.

Enhanced Accessibility and Remote Working

A hosted ERP system can be accessed remotely, which supports hybrid and distributed workforces. Hosted ERP allows for secure web or VPN access, enabling mobile teams to connect from anywhere.

Scalability Without Major Capital Investment

As your business grows, your hosted environment can be scaled vertically (more power, RAM or storage) or horizontally (more servers) without replacing physical infrastructure, something not easily done with traditional on-premises setups.

Retained Customisation

Many businesses hesitate to adopt SaaS ERP due to restrictions on custom modules and workflows. Hosted ERP lets you keep bespoke functionality while benefiting from modern hosting performance and reliability.

Business Continuity and Disaster Recovery

Most ERP hosting providers include backup systems, redundancy and disaster recovery protocols as part of their service. This provides greater resilience than many in-house solutions and supports continuity during unexpected outages.

Key Considerations Before Hosting Your ERP

1. Data Security and Regulatory Compliance

Moving your ERP off-site means you’ll need to verify your host’s ability to secure data, meet industry regulations (like GDPR or HIPAA), and protect against cyber threats. Ask our team about encryption, firewall protection and compliance certifications.

2. Vendor Selection and SLAs

Not all hosting providers offer the same level of reliability or support. Review service level agreements (SLAs), uptime guarantees and support responsiveness. Poor performance from a hosting partner can undermine your ERP system’s reliability.

3. Integration Complexity

Depending on your ERP setup, you may need to integrate with third-party software (such as Payroll or ecommerce platforms). Hosting can introduce additional complexity to these integrations if not managed correctly.

4. Migration Downtime and Risks

Migrating to a hosted environment carries risks, especially if the system is critical to daily operations. A well-planned migration strategy, including backups and rollback options, is essential.

5. Cost Over Time

Although upfront capital expenditure is reduced, hosted ERP introduces ongoing monthly or annual hosting fees. Over several years, this may equal or exceed the cost of maintaining on-site servers, depending on usage and scale, these additional costs need to be balanced against the potential savings resulting from reduced workload for your internal IT team

Steps to Transition to a Hosted ERP Environment

1. Assess Your Current ERP System

Evaluate your existing ERP architecture and whether it can be hosted without significant refactoring.

2. Select a Hosting Partner

Look for providers with experience hosting your ERP platform, strong SLAs, and a good support track record.

3. Plan the Migration

Define timelines, create a rollback plan and carry out thorough testing before the final cutover.

4. Ensure Compatibility with Integrations

Identify third-party applications that interact with your ERP and test all connections post-migration.

5. Monitor and Optimise Post Go-Live

Use performance monitoring tools and regular reviews to fine-tune the hosted environment over time.

Let Exel Shift Your Business to Hosted ERP

The shift to hosted ERP presents a strategic opportunity for businesses seeking to modernise their ERP infrastructure without surrendering control or customisation. By reducing internal IT burdens and improving system accessibility, hosted ERP provides a number of benefits over on-premises solutions.

However, success depends on choosing the right hosting partner, understanding the risks and ensuring your system is ready for the move. With the right preparation, hosted ERP can offer lasting performance, flexibility and scalability, supporting your business through its next stage of growth.

Ready to explore your hosted ERP options? Speak to our team for expert advice and infrastructure planning.