On-Premises vs Cloud-based Software: A Detailed Comparison

We’re all about helping businesses find the right software to help them achieve their goals. But One important question organizations need to answer before they fully embark on a buyer’s journey is what type of software they want: on premise vs cloud software.

The differences between on premises and cloud software are numerous, but for the most part, not actively seen by the end user. On premises and cloud computing refers to the method through which your team members access the software: either stored locally on servers you own and can access in an on-site data center or in a private cloud computing environment managed and maintained by the respective vendor.

While end users may not notice a particular difference between cloud software and on premise software, there are still some vital, key differences between them that should be considered when considering a new product purchase. Some types of product benefits specifically from on premise software and are unadvised to be run in a cloud environment and vice versa. Let’s get into exactly how On-Premise software works

On-Premises Software

On-premises software is installed and runs on computers within the physical premises of an organization. It’s easily accessed by members of your IT department and becomes ingrained in your IT infrastructure. Service providers/vendors will remain a resource for you for tech support and troubleshooting, but the software remains on in house servers on your own storage space. An on premise system works particularly well for smaller firms, as the price points tend to be slightly lower on-average.

Pros of On-Premises Software

Control:

Businesses have complete control over their data, security, and system configurations. Often times with cloud providers, businesses will find that sensitive information being stored on someone else’s server hardware isn’t the best, particularly concerning sensitive data regarding finances and the like.

Lack of Subscription Cost

Cloud based services often come with heavier subscription services. This is because you’re paying for data storage space on their cloud servers. On-premise solutions have the advantage of being a one-time cost, giving businesses more wiggle room when it comes to budgeting.

Performance:

Cloud based services can often be slow or unreliable due to contention from other users sharing resources on the same server. With an on premise service, businesses are able to control their own resources and completely customize them for their needs.

Security Measures:

One of the most important considerations when choosing between a cloud-based and on-premise solution is security. With cloud solutions, data is stored on someone else’s server hardware, so it may be vulnerable to attack from external sources. On premise solutions can provide better protection as businesses can control their own security protocols meaning that valuable data is secure and

Reliability:

Cloud based services can suffer downtime due to outages of the provider’s network or power, as well as slow performance if other users are overloading the server. On premise solutions provide businesses with greater control over their resources and more reliable service.

Cons of On-Premises Software

Initial Capital Investment:

On premise solutions requires a large initial capital investment. This can be seen as an advantage or disadvantage depending on the business and the purpose of the purchase. For some businesses, this is ideal because it allows for the spread of costs over a longer-term period. However, for other businesses this could mean that all of their money must go towards purchasing equipment. Ultimately, it’s dependent on your business priorities, but higher initial costs are very prone to scaring away newer customers.

Maintenance:

Companies are responsible for all updates, system maintenance, and data backups. Cloud computing systems can lean on their provider for service and maintenance, where on premise software requires you to shoulder all applicable maintenance costs.

Server Space:

Cloud computing environment eliminate user need to worry about storage space. Keeping operating systems in house means you need to have the space to contain your software. This means server costs, physical hardware, physical server

Cloud-based Software

Cloud-based software, or Software as a Service (SaaS), is hosted on the provider’s servers and accessed via the internet.

Pros of Cloud-based Software

Cost-effectiveness:

There are no hefty initial costs as users only pay for what they use. A cloud service provider will often distribute the cost across a series of subscription-based payments, making the initial buy-in much more enticing and less financially intimidating.

Accessibility:

Cloud-based software can be accessed from anywhere, providing flexibility and promoting remote work, fitting well with the post-pandemic culture many organizations seem to find themselves in where hybrid work becomes a way of life.

Scalability:

Cloud-based software is much easier to scale than in-house software. With cloud services, users only need to pay for the resources they use and can quickly increase or decrease their usage as needed.

Support:

Most cloud service providers also offer customer support so users can get help whenever they need it. This makes the cloud a much easier option for less tech-savvy users.

Off-Site Data Storage:

The cloud also offers the benefit of offsite data storage. This means that all of a user’s data is securely stored in an external network instead of their own computer or server, which helps protect the data from local disasters such as natural disasters and power outages.

Cons of Cloud-based Software

Dependence on Internet:

Without a reliable internet connection, accessing the cloud can be challenging. Users  also need to consider the security of their connection in order to prevent unauthorized access.

Limited Control:

Organizations may have less control over their data and security. They may not have access to the underlying infrastructure of the cloud service, or be able to customize their system as easily. This can increase risk and limit scalability for organizations that need more flexibility.

Uncertain Regulatory Compliance:

Regulations around data security can vary from country to country, making it difficult for cloud-based services to stay compliant. Organizations must ensure they are well informed about the regulatory requirements for data storage and select a cloud service provider that meets those standards.

In conclusion, the choice between on-premises and cloud-based software depends on the specific needs and resources of an organization. While on-premises software offers greater control and customization, its high cost and maintenance can be a disadvantage. On the other hand, cloud-based software offers cost-effectiveness and accessibility but may present challenges with internet dependency and control. Carefully considering these factors can help organizations make an informed decision that best fits their operations.

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