A lot has changed since companies valued on-premise infrastructure as the best option for their business applications. Nowadays, with cloud solutions on the rise, most companies prefer off-premise solutions such as cloud and colocation.
Forrester Inc. reports that global spending on cloud services has exponentially increased from $17 billion in 2009 to $208 billion in 2019, much of it in the last five years.
Before making the decision, it is important to understand both options and how they work.
What is On-Premise Hosting?
On-premise hosting is the traditional approach where all the required infrastructure, hardware and software for any business application is housed on-site at the company’s premises on their servers.
On-premise hosting requires physical space and a dedicated IT team to monitor and maintain the servers, infrastructure, and security.
Based on the size of the organization and the number of users, there is a one-time license fee with recurring charges for support, training and software updates.
Since on-premise software requires a large investment, it is usually considered a capital expense.
What is Cloud Computing?
Cloud computing or cloud-hosting, on the other hand, refers to computing services via the internet, as opposed to on-site infrastructure.
Cloud-based software, also known as Software-as-a-Service (SaaS), is hosted on the software provider’s servers and accessed through a web browser. The service provider is responsible for storage, database, monitoring, security, networking, analytics, and maintenance.
Since it is an ongoing service, cloud software has a monthly or annual subscription cost. Depending on the plan chosen, there may be additional charges for support, training and upgrades.
The cost of entry is low with a recurring monthly or annual cost, and hence it is considered an operational cost.
The low barrier for entry, including savings on space, maintenance and IT teams, has contributed to the immense popularity of cloud-hosted solutions.
According to one recent study, 93 per cent of enterprises currently use cloud-based software solutions or system architecture.
Most SaaS providers also offer better infrastructure, services and security than what most small to medium-sized businesses can set up in-house.
Advantages and Disadvantages of On-Premise Applications
Organizations have more control over on-premise applications. Modifications are easier to execute, especially for businesses in niche industries with unique processes requiring high levels of customization.
With complete autonomy, the security of their data and sensitive information is the responsibility of the organization. Mobility also poses an issue with third-party integrations required to access the on-premise software on mobile devices.
On-premise applications are therefore best-suited for large businesses with higher budgets and a requirement to customize systems and infrastructure.
Advantages and Disadvantages of Cloud Applications
The top concern for cloud-based software buyers is data security. Credible cloud-hosted SaaS providers prioritize the security of their platform to safeguard sensitive customer data and have strict procedures, audits and standards in place to keep data secure.
They also have fraud detection systems and Web Application Firewalls to detect and mitigate fraudulent and malicious attacks.
Buyers can seek third-party counsel and security audit of the SaaS provider they are considering to ease their security concerns.
Most cloud-hosted solutions are accessible on mobile devices, with some even offering native mobile apps. While accessibility is convenient, security becomes a concern if employees access company files on their personal mobile phones.
High customization is sometimes a problem for companies with specialized needs, but some cloud-hosted solutions like VARStreet, are highly customizable and offer out-of-the-box customizations and capabilities even to large enterprise buyers seeking lower initial costs but heavy customizations.
Let’s look closer at some major factors like cost, security, scalability and more to help you make an informed decision about which applications suit your business the best.
The core difference between on-premise and cloud applications is the hosting, and this affects the cost of deploying either solution.
On-premise systems require a substantial upfront investment to implement. On-premise software requires dedicated servers, software licences, related hardware, servers, software and an experienced IT staff to manage and routinely maintain and upgrade the system.
With a cloud-based system, your initial costs are much lower as the infrastructure, security and maintenance are provided by the SaaS company. The SaaS company implements the software and you access it through the internet.
Cloud computing is a pay as you go model with a monthly or annual subscription fee. You pay only for the services and features you use, reducing liabilities and scaling as your business scales.
Comparison: Cloud-based software has the upper edge over on-premise applications. The subscription-based model requires a low initial investment. In-house hosting is cost-effective for large enterprises with dedicated IT departments and in-house servers.
2. Technical expertise
The technical involvement or knowledge required are other critical factors that affect your decision.
On-premise software requires full technical involvement by a team of IT experts in configuring and maintaining servers, as well as on-location physical resources. These are additional costs that affect the company’s bottom line.
Cloud solutions are fully managed by the SaaS provider and require no technical expertise from the buyer. This gives you a lot of time and resources to focus on your main business without getting caught up in infrastructure maintenance and security-related tasks.
Comparison: Cloud solutions are convenient, and the better option for organizations that lack expertise and resources to deploy in-house infrastructure
The modern software industry is continuously evolving and innovating to meet the market demand and changing customer requirements. Infrastructure that is scalable at a minimal cost is preferred by users over applications that require deploying additional servers.
When a business is experiencing massive growth or expansion into new regions, on-premise software requires significant infrastructure and human resource investments.
A cloud application, on the other hand, can be accessed from anywhere in the world.
On-premise software does not offer the flexibility to scale up or down depending on usage. Scaling up is an investment, as it requires buying new servers as opposed to cloud servers where the bandwidth can be increased to scale up. Scaling down leads to dead investment for unused infrastructure.
Comparison: Cloud-hosted solutions are easy and cost-effective to scale up or down when compared to in-house applications.
4. Security and compliance
You would think that on-premise software is more secure, as it is within the company’s premises. But when data is stored on the company’s servers in-house, there is lesser control on who accesses it. Reports say that most security breaches happen due to employees with malicious intent, and such breaches are often harder to discover.
Cloud servers are typically located in multiple locations, and in the case of a security breach, identifying the compromised server is difficult. SaaS companies are very quick about alerting their customers and taking combative steps as their primary focus is to keep their platform secure.
Cloud-hosted solution providers prioritize the security of their applications with biometric security measures, multi-tiered security, access restrictions and CCTV cameras.
VARStreet’s cloud infrastructure deploys firewall and other advanced technology to prevent interference or access from unauthorized users. WAF security filters, blocks and monitors inbound and outbound HTTP / HTTPS traffic for the web application. It is designed to analyze all HTTPS requests at the deepest level of communication protocols which helps to prevent DDoS, OWASP types of attacks.
These levels of security measures are an added cost for companies, along with employing technical staff to monitor the data center. Disaster and recovery management and compliances are also taken care of by SaaS providers further adding another layer of protection.
Comparison: SaaS providers take care of the security of both hardware and software. They also conduct frequent risk assessments and security audits to ensure that sensitive data is secure.
Organizations can opt for on-premise applications if they have ample technical and financial resources to ensure the levels of security offered by SaaS companies. But for most businesses, from small to large enterprises, cloud-hosted solutions like VARStreet are the better, more secure option.
Another deciding factor before choosing an on-premise or cloud application is the amount of control you need over the setting up of the system.
When deploying an on-premise solution, you have control over the kind of servers you want, the software and the architecture. All these decisions are time-consuming, and hence the implementation can take longer. In comparison, cloud computing is quick to implement, but you do not control the underlying infrastructure.
Also, on-premise applications give you control over upgrades. Many SaaS providers release product upgrades daily, weekly or monthly, which can be disruptive for your business.
Comparison: On-premise software gives you more control over the application, its running and maintenance, so if that is important to you, a cloud-hosted solution may not be for you.
Cloud-Hosted or On-Premise?
Both cloud-hosted solutions and on-premise systems have benefits and disadvantages and are equally promising. Your decision will have to be based on your business need and the software you are considering, as not all solutions work optimally in a cloud or on-premise application.
An additional worry that businesses have with cloud-based solutions is trusting a third party to host their data and risking security breaches, as well as the SaaS company closing down.
While the benefits of cloud computing outweigh its risks, researching the SaaS provider before implementing their solution takes away most of the risks involved, as a reputable SaaS company will have far better security measures than what an individual business can implement on-site.
To Sum Up
The benefits for the adoption of cloud-based software solutions include:
- Increased security and advanced methods based on dynamic data and encoded session identifications.
- Compliance with regulatory policies and periodic security audits.
- Cost-savings and reduction of overhead costs due to economies of scale.
- Better performance through geo-location optimization.
- Higher availability reduced downtime and state-of-art monitoring software.
To get help with your decision-making process, contact one of our experts today. Our cloud-hosted business management solutions include an advanced sales quotation application, modern eCommerce platform, catalog management tool and a FREE CRM.