SaaS vs On Premises

Cloud or On Premises software – which will be better for my business? Many companies face such question. Things get often even more complicated as cloud applications are sometimes considered a winning trend (see for example Gartner’s researches). Some would even say that On Premises software is already at a brink of vanishing. If you’re wondering which software model is better for your company, we’ve prepared a brief guide and essential comparison of both models.

What’s all the commotion about?

So we’ve got two different licensing and delivery models but what’s the difference between them?

Software as a Service (SaaS) – here the software is centrally hosted (no worries about the hardware) and licensed on a subscription basis. Cloud applications are typically accessed by a thin client. SaaS has become a common delivery model for many business IT solutions.

On Premises software is, on the other hand, installed and run locally on your servers and computers. Typically, here you receive perpetual licenses with a one-time license fee. However, you’re on your own with managing and maintaining the hardware.

of organizations surveyed are using cloud

of organizations surveyed are concerned about cloud’s security

of organizations surveyed are optimizing cloud costs

Source: RightScale 2017 State of the cloud report

Which is more affordable?

SaaS – good news here: no upfront costs needed. Instead you pay a subscription fee on a regular basis. In a nutshell, costs are shifted from capital expenditure (CAPEX) to operating expense (OPEX).
On Premises – the opposite here, usually large upfront purchase is needed, so you end up with large CAPEX. However, you pay only once for your licenses so Total Cost of Ownership of the solution can be lower than the cloud application (this doesn’t mean that On Premises gives no OPEX as you have to handle somehow maintenance of the deployed solution).

Is it safe to leave my data in the cloud?

SaaS – some companies are concerned about SaaS security and find migrating their sensitive data into the cloud rather unpleasant. It might be surprising that high level of security is often indicated as a big advantage of the cloud. Why? SaaS providers usually implement security measures beyond the affordability of many organizations.
On-Premises – here you are keeping your system safe and everything depends on you. For some organizations, this is a prerequisite and a blocker for SaaS.

Anytime and anywhere access or offline service?

SaaS – you can access your SaaS application anytime and anywhere if you have Internet accesses (this often tops the list of SaaS advantages). However, in case of Internet blackout or if you’re simply offline you just won’t access your cloud solution.
On Premises – here the software is installed and run on computers on your premises which means you have better control over how and when the system is available.

Quick deployment in the cloud

SaaS – cloud applications can be deployed even instantaneously. You don’t have to worry about the hardware, license keys and software installation on physical computers.
On Premises – here the deployment takes much longer, which might be a significant drawback.

Less customizable cloud

SaaS – cloud solutions are (in general) fully configurable but usually not so much customizable (although it all depends on the hosting). Sometimes SaaS application deployment requires even changes in the organization and adjusting to the solution.

On Premises solutions are usually customizable (however, such adjustments might be expensive).

Who will maintain the system?

SaaS – cloud applications are hosted for you by the solution provider who maintains and manage all the necessary hardware.
On Premises – you own all the hardware. This means you have to maintain it and manage.

What about the control?

SaaS – for some businesses and organizations complete control over their system is a must have and blocker for all SaaS applications. Cloud solutions can be worry free (in some ways) but at the same force you to give away (at least some) control and make you more dependent on external factors.
On Premises –the software and hardware are yours. You control it and decide on everything.

Which is better for my business?

There is no simple answer to this question. All cases are unique and all organizations have different needs and requirements. Before choosing the software model suitable for you it’s good to compare and to think about:

  • billing model
  • security
  • access to the system
  • deployment times
  • configuration and customizations
  • maintenance of the software and hardware
  • control.

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