Even though the corporate solutions landscape has rapidly evolved over the last decade, the decision between an on-premises software installation and a SaaS cloud solution is a common one that many organizations face. There are several key differences between the two that impact cost, functionality, and security.
- Cost: On-premises software requires a significant upfront investment in hardware, maintenance, and upgrades. It also requires the in-house expertise in the form of developers, engineers, infrastructure and security experts. In contrast, a SaaS solution is generally sold as a subscription service and eliminates the need for a large upfront investment. This means that the cost of a SaaS solution is more predictable and often more manageable.
- Functionality: On-premises software offers more customization options, but it also requires more expertise to set up and manage. Development and installation takes a significant amount of time as the complexity of the required functions increases, taking several months to years to setup a system. A SaaS solution, on the other hand, is managed by the vendor. It typically offers less customization but is easier to set up and use. If the SaaS solution offers a powerful API, customization can be further extended. This can lead to a more streamlined and efficient process with a significantly lower go-live time.
- Security: On-premises software is often perceived as more secure because the data is stored on the organization’s own servers. However it also requires more resources and expertise to manage and protect. A SaaS solution is managed by the vendor and typically offers a higher level of security than an on-premises solution, specially when large scale, well know infrastructure providers are used, such as Amazon. It also involves more trust in the vendor and their security practices, which is typically solved with Information Security audits.
In conclusion, when deciding between an on-premises software installation and a SaaS cloud solution, it’s important to consider the cost, functionality, and security implications of each option. While on-premises software offers more customization options, it also requires more resources and expertise to set up and manage. SaaS solutions are easier to use and offer more predictable costs, but they also involve more trust in the vendor and their security practices. Ultimately, the right solution will depend on the specific needs and resources of each organization, but let’s be honest. Who in its right mind would in 2023 decide to purchase an on-premises solution when there are SaaS alternatives on the market?