Cloud ERP became the default model over the past decade. The arguments were compelling: no servers to manage, automatic updates, access from anywhere, predictable OPEX costs. In 2026, a growing number of CIOs and CFOs who made the switch are revisiting that equation. Not because cloud is a flawed technology, but because the real invoice looks nothing like what was sold — and because data sovereignty has become a strategic issue that can no longer be sidestepped.
This movement has a name: cloud repatriation. It doesn’t only concern web giants. According to a Barclays survey of IT executives in 2024, 83% of CIOs plan to repatriate at least a portion of their workloads from public cloud. The Flexera State of the Cloud 2025 report confirms that 84% of organisations cite cloud cost management as their top operational challenge, with cloud budgets running an average of 17% over forecast.
This guide is for the CIO or CFO of a mid-market company that migrated its ERP to SaaS and is starting to have doubts. It asks the right questions, cites verifiable data, and proposes a concrete action plan for making an informed decision.
Why Cloud ERP Costs More Than Advertised
The Hidden Fees Nobody Quantifies Before Signing
The SaaS pricing displayed in an ERP contract rarely reflects the true cost. Several line items accumulate over 5 to 7 years and end up weighing heavily:
- Egress fees: every large-scale data extraction toward a data warehouse or external BI tool generates exit fees from hyperscalers. These fees, typically $0.08–0.09 per GB on AWS, become significant at industrial ERP data volumes.
- Uncapped scaling: usage-based SaaS licences (per transaction, active user, or processed volume) can spike during peak periods without anyone in IT anticipating it.
- Premium modules billed separately: advanced features (analytics, AI, document management, regulatory compliance) are often sold as paid add-ons outside the base contract.
The Flexera 2025 report estimates that 27% of cloud spend is wasted on underused or poorly sized resources. For a mid-market company with a €200,000 annual cloud bill, that’s €54,000 evaporating every year.
The 37signals Precedent: A Calculation That Changed the Debate
The most thoroughly documented large-scale cloud repatriation is that of 37signals, publisher of Basecamp and HEY. Between 2022 and 2024, the company migrated the bulk of its infrastructure from AWS to proprietary hardware. The figures, published by The Register in October 2024, are unambiguous:
- AWS bill before repatriation: $3.2 million per year
- Investment in Dell servers: approximately $700,000 (recovered in under a year)
- Cloud bill after repatriation: $1.3 million per year (essentially contracted S3 storage)
- Projected savings over 5 years: more than $10 million
CTO David Heinemeier Hansson stated: “This hardware, we expect to use for five, maybe seven years. Fully paid back from the savings we generated during the second half of 2023.”
37signals is not a European mid-market industrial company. But its calculation illustrates a principle that applies to any predictable, stable workload: when the load is constant, public cloud charges a flexibility premium that the company never actually consumes.
What the Flexera 2025 Report Says About the Real State of Enterprises
The annual Flexera State of the Cloud report is one of the most cited sources on corporate cloud practices. In 2025, its main findings are:
- 84% of organisations cite cloud cost management as their number one priority
- Cloud budgets are exceeded by 17% on average
- 70% of companies now adopt a hybrid cloud strategy
That hybrid cloud figure is key: the question is no longer “cloud or on-premise” but “which workloads go where.”
The 4 Signals That Justify Serious Consideration of Repatriation
Signal 1: Your Cloud Bill Is Growing Faster Than Your Revenue
If your SaaS ERP costs are rising 15–20% annually while your business stagnates or grows at 5%, your economic model is deteriorating. Run a simple calculation: project the trend over 7 years, compare it with the equivalent on-premise infrastructure cost (servers, maintenance, IT staff) amortised over the same period. If the gap exceeds 30%, the topic warrants a proper study.
Signal 2: Your Business Data Transits Through Servers Outside the EU
The US CLOUD Act of 2018 authorises American federal authorities to access data held by US companies, including outside US territory. For companies operating in sensitive sectors — defence, healthcare, finance, energy — this legal exposure is no longer acceptable. Even for a mid-market industrial company, exposing customer data, margins, and production flows to a foreign jurisdiction is a risk that must be assessed.
The European Data Act, in force since 2024, strengthens portability rights and caps outbound transfer fees at €0.01 per GB from 2027. It does not resolve the CLOUD Act question, but it mechanically facilitates exit from US cloud for those who wish to repatriate.
Signal 3: SaaS Customisations Have Hit Their Ceiling
Most SaaS ERP systems in “multi-tenant” mode (shared infrastructure across all the vendor’s clients) limit deep customisation. The vendor imposes automatic updates that can break specific configurations, proprietary APIs that create dependency, and fixed modules that cannot adapt to differentiating business processes.
If your current ERP forces your processes to adapt to the tool rather than the other way around, the SaaS promise has turned into a constraint.
Signal 4: Latency Is Penalising Real-Time Operations
In industrial production environments with MES or SCADA systems connected to the ERP, or in warehouses with high-frequency picking terminals, public cloud latency (routed through the internet and CDNs) can degrade operational performance. An on-premise ERP on a local LAN eliminates this variable entirely.
When Cloud ERP Remains the Right Decision
Repatriation is not a panacea. Several company profiles are better off staying in SaaS:
- Fast growth with frequent hiring: instant provisioning of new users, without resizing infrastructure, remains a genuine advantage.
- Heavily seasonal activity: a food distributor with peaks in November–December benefits from cloud elasticity.
- No internal IT team: managing on-premise infrastructure without in-house skills often ends up costing more than SaaS, in hidden outsourcing costs.
- Frequent M&A activity: integrating or carving out entities is simpler in a multi-entity SaaS environment than in siloed on-premise infrastructure.
- SMEs under 50 users: below a certain volume, CAPEX infrastructure amortisation never offsets the cost of SaaS.
The practical rule: if your ERP load is predictable, stable, and high-volume, repatriation warrants a study. If it is irregular, growing, or geographically dispersed, cloud remains the right model.
ERP Vendor Positions on Repatriation
SAP S/4HANA: On-Premise Officially Maintained Until 2040
SAP is the ERP vendor offering the longest on-premise support guarantee. SAP has officially announced the maintenance of at least one version of SAP S/4HANA on-premise until 31 December 2040. For a mid-market SAP customer considering repatriation, this commitment is a solid foundation.
Important nuance: the new artificial intelligence features (Joule, RISE AI agents) arrive first in the cloud version. On-premise remains functionally complete for core management, but accumulates a growing gap on AI capabilities.
Oracle and NetSuite: No On-Premise Option
Oracle Fusion Cloud ERP and NetSuite are cloud-native architectures with no on-premise version available. For companies on either of these ERPs wishing to repatriate, the only option is to change vendor. That is not trivial: an ERP migration to a different vendor typically represents 18 to 36 months of work and a CAPEX/OPEX budget to build from scratch.
Microsoft Dynamics 365: On-Premise with a Documented Functional Gap
Microsoft offers an on-premise version of Dynamics 365 Finance & SCM, deployable on client servers. The option exists, but Microsoft has officially documented a growing functional gap between the cloud and on-premise versions. Copilot features, bimonthly updates, and modules such as the Sustainability Manager are only available in the cloud.
For a mid-market company on Dynamics 365 considering partial repatriation, a hybrid architecture (on-premise or sovereign private cloud for transactions, public cloud for analytics and reporting) may be an intermediate path.
Odoo, Dolibarr, Sage X3: Available and Maintained On-Premise Options
ERP systems with available source code or classic perpetual licences offer the broadest flexibility:
- Odoo Community: open-source version deployable on-premise without a licence, actively maintained. Odoo Enterprise on-premise is also available with an annual licence but customer-owned infrastructure.
- Dolibarr: open-source ERP, natively on-premise, suited for SMEs. No constraining SaaS version.
- Sage X3 (now Sage Business Cloud X3): available in on-premise mode with a perpetual licence, making it a viable repatriation option for companies currently on Sage X3 SaaS.
5-Year TCO Comparison: On-Premise vs SaaS
The table below compares two architectures for a mid-market company with 150 ERP users in Europe, over 5 years. Figures are indicative order-of-magnitude estimates.
| Line item | SaaS ERP (5 years) | Modernised on-premise (5 years) |
|---|---|---|
| Licence / subscription | €600,000–€1,200,000 | €150,000–€400,000 (perpetual + maintenance) |
| Infrastructure | €0 | €80,000–€200,000 (servers, network, redundancy) |
| Dedicated IT staff | €0 (included in SaaS) | €100,000–€250,000/year (0.5–1 FTE) |
| Integrations and developments | €50,000–€150,000 | €80,000–€250,000 |
| Egress fees and premium modules | €30,000–€120,000 | €0 |
| Estimated total over 5 years | €700,000–€1,600,000 | €730,000–€1,550,000 |
This table shows that the difference does not systematically favour either option. The determining factor is load stability: the more predictable it is, the more efficiently on-premise CAPEX amortises. SaaS wins on flexibility and cost when the load is variable and the IT team is lean.
Repatriating Your ERP: A 4-Phase Plan
Phase 1: Real TCO Audit (3 to 6 Weeks)
Before any decision, reconstruct your complete cloud cost over the last 24 months: base subscription, add-on modules, integrations, egress fees, internal cost of managing SaaS incidents, and customisation surcharges. Compare with a realistic quote for equivalent on-premise infrastructure.
At this stage, do not decide yet. Only quantify the gap. If it is below 20% over 7 years, migration probably does not justify the risk.
Phase 2: Qualifying Candidate Workloads (4 to 8 Weeks)
Not all ERP modules face repatriation equally. Stable transactional modules (accounting, procurement, inventory, production) are the best candidates. Modules with high elasticity needs (e-commerce, campaign management, real-time analytics) remain better suited to the cloud.
Build a repatriation matrix by module: transaction volume, load predictability, data sensitivity, dependence on cloud integrations.
Phase 3: Choosing the Target Architecture (4 to 6 Weeks)
Three architectures are available:
- Full on-premise: own infrastructure in an internal or colocation data centre. Maximum control, high CAPEX, dependency on internal IT staff.
- Sovereign private cloud: dedicated hosting with a certified provider (such as OVHcloud or Scaleway with relevant EU certifications), with infrastructure exclusively under EU jurisdiction. A good compromise for mid-market companies without their own data centre.
- Hybrid: transactions on-premise or sovereign private cloud, analytics and reporting in public cloud. Allows retaining cloud benefits for non-sensitive workloads.
Phase 4: Migration and Rollback Plan (6 to 18 Months)
ERP migration always carries risk. A few non-negotiable rules: keep the SaaS environment running in parallel for at least 3 months after cutover, document a complete rollback plan (how to return to SaaS if the migration fails), and budget a 6-week stabilisation sprint post-cutover before shutting down the cloud environment.
Repatriating an ERP is not an IT project. It is a business transformation initiative with a direct impact on accounting, production, and HR. Involve business stakeholders from Phase 1.
To deepen your analysis, see our decision guide on cloud-native ERP vs on-premise for mid-market companies and our study on the hidden costs of ERP TCO over 5 years. If data sovereignty is your primary criterion, our article on ERP and EU sovereign cloud: SecNumCloud, HDS and BSI-C5 provides the regulatory framework for your decision.
