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

The business world is constantly evolving, and so are the tools we use to run it. Today, a crucial decision for many companies is where to house their software: on-premises servers or the cloud? Both options have their pros and cons. This blog post will delve into the key differences between on-premises and cloud-based software, helping you navigate this critical choice and pick the best fit for your organization’s needs.

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 refer 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-premises software, there are still some vital, key differences between them that should be considered when considering a new product purchase. Let’s get into exactly how on-premises 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-premises 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. This allows for a high degree of customization and ensures sensitive information remains within the company’s physical boundaries. This can be a crucial factor for organizations handling highly regulated data or those with specific compliance needs.

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. While there is an initial investment in purchasing the software license and hardware for your on-premises software, businesses have more control over ongoing costs associated with maintenance, upgrades, and data storage.

Performance:

On-premises software eliminates the need to send and receive data over the internet. This can significantly reduce latency (delay) in data processing, making the software feel more responsive, especially for tasks requiring real-time processing.

Security Measures:

One of the most important considerations when choosing between a cloud-based and on-premises solution is security. On-premises software offers businesses greater control over data security. Since the data and software reside within your own infrastructure, you can implement stricter access controls and physical security measures. This can be appealing for organizations handling highly sensitive information or those with specific compliance needs regarding data residency.

Reliability:

On-premises software offers greater control over factors that can impact reliability. While both cloud and on-premises solutions can be affected by power outages, on-premises systems are less susceptible to outages caused by internet connectivity issues or problems with the cloud provider’s infrastructure.

Cons of On-Premises Software

Initial Capital Investment:

On-premises solutions require 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-premises software requires you to shoulder all applicable maintenance costs.

Server Space:

On-premises software can be restrictive when it comes to scaling your server space. Adding additional storage or processing power requires physically acquiring new hardware and integrating it into your existing infrastructure. This can be a slow and expensive process, especially if your needs fluctuate frequently.

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:

Cloud-based software offers robust security, but organizations might have less control over where their data resides and the specific security practices in place. Additionally, pre-configured settings might limit customization options, potentially hindering a perfect fit for specific organizational needs.

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.

Contact BrainSell today to discuss what the best fit for your organization might be!