On Premise vs. Cloud | Differences, Advantages and Risks

Which one is better: Cloud Computing or On-Premises software? Many companies find it difficult to decide between these two options. Companies planning to quit their on-premises software and move to cloud computing systems wonder if it is worth it. When weighing the pros and cons of both alternatives, numerous elements need to be taken into account.. The most important point here is to know the needs of your company well and not to overlook these needs. Apart from this, the advantages, disadvantages, and differences of both options should be examined objectively.

On-Premises Software

In order for a business to use on-premises software, it must purchase its license or copy. Because of the software is licensed, it has a strong protection structure as the entire software sample is within an organization. After the software is purchased, it is installed on the on-premises infrastructure. Additional power servers requires the purchase of database software and operating systems. Because everything is done internally with the on-premises solutions, from the implementation of the solution to its operation; maintenance, security and updates should also be done on-premises.

In short, the company assumes all responsibility for the software without the participation of any third party. This means that the company is responsible when something breaks down or doesn’t work. An on-premises installation requires the readiness of on-premises server hardware, software licenses, integration capabilities, and IT staff to support and manage potential problems that may arise.

Cloud Computing

Cloud and on-premises software differ significantly from each other. But a third-party provider in the cloud provides all this for the business. Cloud computing is the provision of on-demand computing system resources, does not require effective management, and often includes applications such as storage and processing power. It uses virtual technology to host the company’s applications offsite. With a shared cloud, complete privacy of the customer’s data is observed, but multiple tenants share the cloud service. It is a cost-effective solution but offers limited customization.

In the cloud-based subscription model, the business does not need to purchase any additional infrastructure or licenses. For an annual fee, a cloud provider secures servers, network and software for you. Therefore, there are no capital expenditures. It regularly backs up data and businesses only pay for the resource it uses. The cloud lets you connect with your customers, partners and other businesses from anywhere. This makes it very interesting for businesses looking to expand globally.

Cloud computing service also enables almost instantaneous deployment of resources since all necessary configurations are predetermined. Thus, every new software integrated into your environment is ready for use immediately after a company subscribes. With instant provisioning, time spent on setup and configuration is eliminated and users can access the application immediately.

Key Differences Between On-Premise Software and Cloud Solutions

As noted above, there are some differences between on-premises and cloud environments. The best route for your business depends on your unique needs and desired outcomes. Below is the on-premise vs cloud comparison:

  • Deployment

On-Premise: The company is responsible for maintaining the relevant processes and solving problems. Resources are distributed within the company and within an organization’s IT infrastructure.

Cloud: In the public cloud computing environment, there are different forms of cloud computing such as private cloud, hybrid cloud solution, public cloud, and the resources are hosted in the facilities of the cloud service provider. Businesses can access these resources whenever they need it. In the relevant processes carried out by the host-cloud service provider, the data is protected in the systems on the server.

  • Cost

On-Premise: A system built from scratch results in high costs. Besides the initial investment, there are also maintenance and operating costs of additional infrastructures and processes. Organizations that opt to house their software internally must also bear the associated costs of server infrastructure, energy costs, and allocated space.

Cloud: Organizations that choose to use the cloud computing model need to pay only for the resources they use with no maintenance costs, and the price varies depending on the amount of use. Comparatively, a cloud service, especially small-sized ones, is much more cost-effective. Installation and operation time is cheaper and faster. Companies must pay a small subscription fee for updates and maintenance done by the cloud host.

  • Control

On-premises: On-premises software allows the business to store all its data and have full control over it. Companies in highly regulated industries with extra privacy concerns prefer on-premises software over the cloud.

Cloud: In cloud computing, the data ownership problem is an issue that many companies are struggling with. The data and encryption keys are located at your third-party provider, so if the unexpected happens and there is an interruption, you may not be able to access this data.

  • Security

On-Premise: Companies with extra sensitive information or governments must have a certain level of security and privacy. On-premises softwares provides these needs of companies. The use of the cloud is still a concern for many industries in terms of security, so an on-premises environment makes more sense, despite some disadvantages and price.

Cloud: The biggest obstacle to cloud computing deployment is security concern. There have been many security breaches in the cloud so far, so companies are biased towards the cloud in terms of security. The cloud is not capable of preventing all security breaches.

  • Compliance

On-Premise: Most companies have rules and regulatory controls that they must follow. To meet the rules set by the government or industries, companies are required to keep complaint data in place. This means that all data can be easily stored or transmitted if kept in-house.

Cloud: When companies choose the cloud computing model, they need to make sure that the service provider meets the regulatory requirements and rules in their industry. Keeping the data of customers, employees and partners safe and ensuring confidentiality rules is an important criterion.

Advantages of On-Premise and Cloud Computing

Advantages of On-Premises Software

On- premise software has many advantages that will improve your business processes. We can list the most powerful advantages of in-house software as follows:

  • Since companies develop all on-premises software themselves, it offers more customization than a cloud-based system.
  • The company has full authority and control over hardware, software and data platforms, including upgrades, configurations and system changes.
  • Firms using on-premises software pay for licenses only once. This feature results in a much lower total cost of ownership than cloud.
  • No internet connection or external factors are required to access the software.
  • The security measures of on-premises software are much stronger than the cloud.

Advantages of Cloud Computing

When we compare on-premises software with cloud software, on-premises software can be advantageous in some cases. That’s why it’s important to focus on strengths.

  • It can be put into use quickly without long installation processes. This feature provides an advantage in competitive markets.
  • It allows access anytime/anywhere. Companies can access the application anytime and anywhere via the web browser of any device.
  • The costs of cloud infrastructure applications are lower than on-premise software. Instead of paying a large initial license fee, monthly payments are lower. The costs of cloud software are also predictable.
  • Monthly payments include maintenance and support services. Companies do not have to solve their problems on their own. Thus, labor is saved.
  • Applications can be uploaded to the cloud software in a short time and can be commissioned within a few hours/days.

Disadvantages of Cloud Computing and On-Premise Software

Disadvantages of On-Premise Software

Despite the many advantages provided by in-house software, there are also disadvantages.

  • Initial costs are high, requiring firms to spend large capital expenditures.
  • When you buy a software, it takes a long time to configure the hardware, test the program and make it available to employees with in-house software.
  • When using on-premises software, all responsibility is on the company. This situation increases the workload of IT.
  • Various usage difficulties may arise for companies with offices in more than one location.
  • Integration of new software can be costly.
  • It takes longer to complete the setups on the servers and each computer.

Disadvantages of Cloud Computing

As you can see, cloud-based computing has many advantages. However, there are a few drawbacks that must be considered before signing up:

  • Since the payments will be made monthly, it brings more costs in the long run.
  • Services are generally developed according to the needs of the sector, not the needs of the companies. Therefore, cloud software offers less flexibility and customizability.
  • Cloud software is not as secure as on-premises systems. That’s why it’s so important to find a supplier that supports multi-factor authentication.

Do You Have to Choose One or the Other?

One of the most important trends emerging with the changing industry and company needs is the use of hybrid systems that run both cloud and in-house solutions together. This means you don’t have to make a clear choice between on-premises or cloud-based systems. Instead, you can use both for optimal needs. For example, while you may have on-premises servers for data that is important to privacy rules, you can store your daily data in the cloud. Thus, while all your employees can access daily data quickly, you can safely store your important data.

If you want to get detailed information about Cloud and On-premise software integrations, do not hesitate to contact us.

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