Continuously demanding market forces business owners to look for solutions that allow staying ahead of the competition. In fact, finding “the one and the only system” is not an easy task, not to say impossible. To introduce the topic of cloud-based systems and software on the local infrastructure, we have prepared a short comparison of both models.

When planning or choosing the right technology for deployment, you should consider their advantages, disadvantages, and other benefits that you and your customers may get. Although it should be obvious that your system should ensure the most remarkable customer experience, it is often overlooked because of costs of investment or complex customization.

So let’s take a look at what is all the fuss about.

Software as a Service (SaaS)

SaaS stands from Software as a Service, often a so-called cloud-based solution. In this model, the client does not have software on his servers but rents it from the SaaS vendors. It means that the SaaS provider manages the hosting infrastructure and the application (system). It is worth mentioning that in this case, that the owner doesn’t have to worry about the system’s (and servers’) maintenance, updates, and data security. SaaS software is usually paid for in the form of a subscription and stays in a cloud (cloud computing).

On-Premise

On-Premise is a much more “traditional” model. The software is installed on the customer’s servers, which remains his sole property. Of course, it is also the customer’s responsibility to maintain all the necessary equipment to make the system work properly. Here, software licenses are usually billed by a one-time payment. Of course, it doesn’t mean that a business should immediately hire IT specialists who will take care of a given resource’s maintenance and management when choosing this solution. Sometimes it may be more profitable to outsource these activities to an external company (in case of not having an internal team).

Crucial factors that determine the differences in both solutions (SaaS vs On-Premise)

The choice between SaaS solutions (Software as Service) and On-Premise solutions should result from a thorough understanding of the company’s needs and identification of its key processes. Now let’s take a look at the main factors determining the differences between the two models.

Hosting

Where should you run the application—in your own data centers or hosted in the cloud?
Cloud-based solutions are located entirely on the SaaS providers’ hardware. It means that you don’t have to worry about setting up the hardware or control updates because the whole system is hosted externally.

On-Premise requires the right resources in-house to ensure control of the system. In some cases, security compliance does not allow third-party hosting, in which case an On-Premise solution would be the best choice.

Budget – where will it be cheaper?

The SaaS software’s undeniable advantage is the low cost of running the system (no need to purchase hardware, third-party software, etc.). In this system, long-term costs increase significantly due to the need for cyclical payment of the service.

On-Premise software usually requires a lot of costs initially. Still, due to a one-time license fee, the total cost of the solution may be lower than in SaaS (on the other hand, there is still the issue of maintaining the system).

Safety – how about data security?

Topics related to access to sensitive data, ensuring their confidentiality, and security are factors that are considered key when deciding on the model of solution delivery.

Choosing SaaS solutions, companies are afraid to use cloud computing solutions due to the concern about the data’s security. Paradoxically, it is often mentioned as a significant advantage of SaaS. SaaS providers simply use very strong security that is often beyond the (cost) reach of many companies.

On-Premise – in this system, you have complete control over your data, and you take care of the security yourself. For some companies and institutions, this is a necessary condition that disqualifies SaaS solutions. What’s worth mentioning is that you’re responsible for creating a disaster recovery plan.

Deploy – faster in the clouds?

Setting up a cloud-based solution (SaaS) is usually much faster than the On-Premise system. A significant role here is played by the lack of the need to provide hardware, license resources, and installation of the system on servers.

Long ‘go-live’ time is often mentioned as a big flaw of On-Premises solutions. However, if you want to have your own solution tailored to your needs, isn’t it worth waiting a bit? Here you can read about our fastest implemented project.

Customizations – the cloud is hard to change

Cloud computing (SaaS) solutions are usually fully configurable but very often not very customizable. It may even happen that the use of cloud solutions requires changes in the enterprise due to the limited customization options of the solution.

On-Premise definitely wins the battle. The situation is usually much better here than in a SaaS system. On-Premise software is generally highly customizable (but comes with additional costs).

Control – the climax

Some companies do not want to use SaaS software because of (at least partial) loss of control. On the one hand, the SaaS solution allows you to forget about many problems, but on the other hand, it means more dependence on external factors (such as Internet access).

On-Premise- IT department or technician has to keep the (computing) processes in working order. For some companies, this will make the case in favor of On-Premise solutions.

SaaS vs on-premise pros and cons infographic

Which system should you choose for your company?

If you already have a well-configured and secured server room (data centers) in your organization, you probably either employ an IT specialist or use an external company’s services in this area.

Additionally, if your infrastructure is compatible with the solution (e.g., software) you want to deploy, On-Premises may be a better solution than cloud computing in this case (SaaS model). You will only have to cover the costs of the solution itself (e.g., software) and the possible cost of implementing and developing the IT hardware(e.g., additional RAM or a new UPS).

In the long run (e.g. several years) it may be a more profitable investment.

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However, if you do not have any knowledge of IT-related topics or use the help of external companies in this area, you should probably choose a cloud-based solution. After paying a fixed periodic amount (e.g., monthly or yearly), you will be able to start using the SaaS solution immediately, without having to deal with technical issues at all.

So, who wins this battle? The answer is “it depends”. Looking at different requirements of companies, mainly potential benefits should be taken into consideration.

Customization

On-Premise– Customization of software is high as the features are developed as per the requirements of the company.

SaaS– Customization is lower (limited) as the features adhere to industry standards and best practices.

Security

On-Premise – High grade of security measures, as sensitive information can be stored on-site utilizing the company’s security protocols.

SaaS – Similar grade of security, the only difference being that the information is stored off-site, and the responsibility of security lies with the vendor.

Integrations

On-Premise – Integrations can be relatively more straightforward over the intranet. Data transfer between systems will be faster.

SaaS – Integrations with other corporate systems and software can get complicated because data will often be sent over the internet. SaaS vendors should have well-defined web services as integration points.

SaaS vs. On-Premise: pros and cons of both models

On-Premise

Pros

  • in some cases: lower maintenance costs in the long run with a large number of interactions
  • complete control over the infrastructure in the organization
  • possibility of precise configuration of the solution by the buyer (greater independence from the providers)

Cons

  • Costs of:
    • resources, license, and deployment
    • adapting to the client’s infrastructure and architecture
    • administration, management, and security of the solution
    • resources for configuration and maintenance of the systems
  • longer implementation time
  • greater responsibility on the part of the client (upgrades, security, compliance with the GDPR)

SaaS

Pros

  • no implementation cost to start with
  • short ‘go-live’ time
  • low monthly fees depending on the actual use of the solution (e.g., minute billing taking into account the minimum rate)
  • cost of hardware, its deployment, management, and ensuring security on the part of the provider (offering the entire computing infrastructure)
  • responsibility for the GDPR aspects on the part of the provider
  • no need for having internal staff to configure and maintain the software
  • the possibility of changing or resigning from the service in the event of new needs

Cons

  • depending on the licensing model, in the case of many interactions, the purchase of an On-Premise license may be more advantageous in the long term (in Omni-Chatbot, however, connection fees are the same for both models)
  • dependence on the supplier’s resources (staff, infrastructure) may, in some cases, result in less flexibility in the organization

Which solution should you choose for your business?

Implementation in the SaaS or On-Premise model? Unfortunately, there is no ready answer to it. There are organizations for which a cloud solution is the best option because it allows them to use it from anywhere in the world without investing in the provision and maintenance of IT infrastructure. On the other hand, centralized organizations using local business solutions still choose the On-Premise model more often, seeing more benefits.

So think about what you require from deployment, performance, updates, technology. Think if you can have an internal team based in-house. Consider the decision wisely because the choice “SaaS vs. On-Premise” will be crucial for the enterprise. Once you have ended planning all of your requirements and reviewed all the possible options, you will be ready to make the best decision for your solution. Click here to get in touch with an expert.