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Business Software – On-Premise vs Cloud (SaaS)

How should you host your ERP solution?

One of the major choices facing any company evaluating ERP software is what type of deployment model you will choose. Will you rely on a traditional on-premises, remotely hosted or cloud-based implementation?

Discovering the difference between these solutions can often be very confusing, so having solid definitions of each deployment type is imperative.
On-Premise Hosting – With this type of implementation, you are responsible for everything related to the running of the software. You must purchase the network infrastructure, power, servers, operating system, database, software etc… You also need to maintain all of this to keep it running, safe and up to date. Once you purchase a license for the software from the vendor, the software is installed on your servers.

HostedLike on-premises, you can purchase licenses to use the software from a vendor, but rather than purchasing all of the hardware and infrastructure, you rent it from the vendor or another third-party provider. It is remotely-hosted, but you still own the software you purchased.

Cloud – Using a software-as-a-service (Cloud) subscription model, you do not have to purchase any licenses or infrastructure. The only cost is an annual fee for the cloud services, which include servers, network and software all maintained by the cloud provider.

Key Differences of On-Premise vs Cloud

As outlined above, there are a number of fundamental differences between an on-premises and a cloud environment. Which path is the correct one for your business depends entirely on your needs and what it is you’re looking for in a solution.

In the table below, you will find the key differences between an on-premise solution, and a cloud solution, focusing on the key aspects which should effect your choice.

On-Premise

In an on-premise environment, resources are deployed in-house and within a business’s IT infrastructure. A business is responsible for maintaining the solution and all its related processes.

Cloud

While there are different forms of cloud computing (such as public cloud, private cloud and a hybrid cloud), in a public cloud environment, resources are hosted on the premises of the services provider but businesses are able to access those resources and use as much as they want at any given time.

On-Premise

For businesses that deploy software on-premise, they are responsible for the ongoing costs of the server hardware, power consumption and space.

Cloud

Businesses that elect to use a cloud computing model only need to pay for the resources that they use, with none of the maintenance and upkeep costs, and the price adjusts up or down depending on how much is consumed.

On-Premise

In an on-premise environment, the question of ownership of data is one that many companies – and vendors for that matter, have struggles with. Data and encryption keys reside within your third-party provider, so if the unexpected happens and there is downtime, you may be unable to access that data.

On-Premise

Companies that have extra sensitive information, such as government and banking industries must have a certain level of security and provacy that an on-premise environment provides. Despite the promise of the cloud, security is the primary concern for many industries, so an on-premise environment, despite some of its drawbacks and price tag, makes more sense.

Cloud

Security concerns remain the number one barrier to a cloud computing deployment. There have been many publicised cloud breaches, and IT department around the world are concerned. From personal information of employees such as login credentials to a loss of intellectual property, the security threats are real.

On-Premise

Many companies these days operate under some form of regulatory control, regardless of the industry. Perhaps the most common one is the Health Insurance Portability and Accountability Act (HIPAA) for private health information, but there are many others, including the Family Educational Rights and Privacy Act (FERPA), which contains detailed student records, and other government and industry regulations. For companies that are subject to such regulations, it is imperative that they remain compliant and know where their data is at all times.

Cloud

Enterprises that do choose a cloud computing model must do their due diligence and ensure that their third-party provider is up to code and in fact compliant with all of the different regulatory mandates within their industry. Sensitive data must be secured, and customers, partners, and employees must have their privacy ensured.

Hybrid Cloud Solutions

While the debate of the pros and cons of an on-premise environment pitted against a cloud environment is a real one, and one that many enterprises are having within their offices right now, there is another model that offers the best of both worlds.

A hybrid cloud solution is a solution that features an element of different types of IT deployment models, ranging from on-premise to private cloud and public cloud. A hybrid cloud infrasatructure depends on the availability of a public cloud platform from Microsoft, via Azzure IT, a private cloud constructed either on-premise or through a hosted private cloud provider, and effective WAN connectivity through both of these environments.

Speak with our experts to understand which hosting option is best for you!