This is the traditional deployment method for ERP system. Software is purchased outright along with the associated software assurance and is installed on the customer’s servers within their internal network.
This deployment option provides customers with the greatest control over security and often provides additional integration options with other internal systems.
With on-premises deployment, you can

Leverage existing investments
Reduce costs by using the hardware and software you
already own.

Easily connect with legacy systems
While most cloud solutions can connect with existing
equipment, on-premises solutions can always do so.

Guarantee predictable performance
On-premises solutions are not subject to fluctuations in
performance or availability due to the Internet (although on-premises solutions are not necessarily faster than hosted ones).

Support compliance requirements
Ensure compliance with security and other policies that
require on-premises solutions