Saas vs On-premise Solutions: What are they? Learn their pros and cons

When looking for customer relationship management software or enterprise resource planning software, there are many different implementation options to choose from. And with Software-as-a-Service development (known as SaaS) and other cloud-based models on the rise, many enterprises are trying to figure out which implementation type would be the best fit.

Read on to learn about the major differences between the SaaS model and the on-premise model and how they can help you unleash your enterprise's full potential.

SaaS vs. On-premise

The main thing that separates SaaS from on-premise is the difference in who hosts and maintains it. On-premise solutions are hosted and maintained entirely by you, while with SaaS you outsource those responsibilities to a third-party provider.

The best implementation type for your company depends on a number of factors, such as your budget, objectives, and security requirements. It's also important to take your company's culture into account. In order to choose the best implementation for your business, you have to figure out what features are most important to you.

When making the decision to pick a SaaS vs. on-premise solution, there are a number of factors that can help you make the right choice. The below points should give you an idea of what they may be.

Integration

SaaS: When you’ve decided on a SaaS solution, setting it up is pretty straightforward. The availability of the service via the internet means that users can start using it as soon as they want, regardless of where they're located. While SaaS can often save time and money, technology buyers might also stumble upon company security or compliance issues.

On-Premise: With SaaS, it's harder to make sure that everyone in your company has access to the platform, and any changes made by the workflow system will affect the entire team. The need for software to be hosted in-house means a greater outlay of capital is needed. The need for this also limits a company in terms of the number of potential users, as to access the software it needs to be on their premises.

Ask yourself these questions to make a decision:

1. How many people need to have access to the data?

2. What software is needed outside of the workplace?

3. What are the company's internal resources available for on-premise implementations?

Budget

SaaS: One of the biggest advantages SaaS has over traditional solutions is that entry costs are low—you're just paying for a subscription. This means there's no need to spend a lot up front. A subscription-based model for a software or resource is usually paid monthly, annually or as part of a service contract. It reflects the licence type, the number of seats, or other available features. Note that even if this means you only have to make one regular payment every year and use it as much as you need to, unused licences can make up a lot of your cloud computing costs.

On-Premise: Remote cloud solutions are a more cost-effective solution to on-premise systems. They don't entail any additional expenses on behalf of the business, so departments can spend their money on other essentials. While ongoing maintenance expenses can be low, on-site solutions require staff with different skills and a lot of operating expenses. From IT staff to upgrades, costs will gradually increase.

To make the decision easier, ask yourself these questions:

• What are the data and hosting fees along with other IT infrastructure costs for your company?

• Which type of payment do you prefer (one-time or monthly fees)?

• The total cost of ownership (on-premise vs. SaaS) is a tricky question to answer. The total cost will vary depending on many factors, and some of them include staff availability, tech support availability, and more.

Maintenance

SaaS: With a SaaS, the responsibility for maintenance and support is passed over to the provider. The provider should be available and provide business continuity for any disaster, but it is also important for businesses to examine the security and compliance policies before entrusting all their data to a third party.

On-Premise: Although this option can be great for saving money in the long run, companies run the risk of having to fend for themselves when it comes to upgrades, updates, and support. On-premise software will require you to have skilled IT staff on hand at all times who know how to deal with disaster recovery, fix bugs, and any other problems that may affect the availability or security. While this is a lot of work, there are more pros than cons to this approach.

Asking these questions will help you decide:

• Does your company provide IT support for software?

• How much control do you require to store your data?

• Is there anything specific you want your development company to take care of?

Scalability

SaaS: One of the coolest benefits of SaaS is the fact that you can scale it up or down depending on your company's needs. Most vendors allow you to upgrade and add more as your needs change. If you need to downgrade, there is usually a period of around 12 months where this can be done before the next renewal window.

On-Premise: It’s not surprising that software as a service is much more scalable than an on-premises solution. Plan in advance, and you'll have a smoother time expanding your business. It's easy to underestimate how difficult it can be when starting out, and you'll need on-premise solutions that are flexible enough to keep pushing forward as your business does.

To make the decision process easier, answer these 3 questions:

• Is it possible to adjust the storage capacity to meet growing business needs?

• Is your company prepared to offer software on-premise if needed?

• Do you have the resources and budget to add in more servers, hardware, migration workloads, storage capacity, CPUs?

Personalization

SaaS: When your application is hosted in the cloud, you'll find upgrading and adapting it is a simple process. There are many licence types and features available for an upcharge, depending on the software. However, one size doesn't fit all. For instance, in some cases, specific features may only be available if you purchase premium versions of the software.

On-Premise: If you are using an on-premise solution, upgrading will take more planning and investment. It’s important to work with good IT staff that will take responsibility throughout the planning, deployment, and control stages of your IT project. But on-premise software gives you more options when it comes to customization or adding features in-house.

To make the decision easier, ask yourself the following questions:

• Is your current hardware sufficient for the new requirements?

• Do you have the necessary resources internally to handle product customizations or upgrade projects?

• Does a heavy workload prevent you from upgrading the software?

Cyber Security

SaaS: Contrary to popular belief, there is very little difference between things like SaaS applications and storing them on-premise. They both have the same level of risk when it comes to hackers. Though SaaS vendors may be upgrading their defences all the time, they’re constantly under attack from hackers and other malware. If a company wants to make sure their data is protected, they should definitely make sure all of their security and compliance needs are met.

Unless you have a dedicated IT team who continuously deploys the newest security measures, storing your data on-premise means it is less protected than storing it with a third-party provider. You would have to set up your own security walls and barriers if you went for an on-premise solution. You'll also need high-level knowledge about compliance and the ability to detect intrusions as soon as they arise. There is a higher initial cost with these solutions too.

To be able to make the decision easier, ask the following questions:

• Want to know if you have the right internal security?

• Do you have the budget to employ IT experts that can properly secure your systems?

• How do the company's regulatory policies like GDRP and SOC2 compare to industry standards?

Data Recovery

SaaS: Storing data in the cloud with a third-party provider usually means it is backed up automatically. With a technological disaster, you don't have to stress about lost data because your information is simply backed up. Different products offer different services and prices for backup recovery — it could be a part of the product or come with an additional charge.

On-Premise: The cost of maintaining an on-premise recovery system is very high. The best way to backup data is to set up a second storage that can be accessed when the central CPU stops working. Businesses that don’t invest enough resources in backups risk losing their data—and their reputation.

Consider your decision by asking the following questions:

• Do your SaaS vendor's backup and recovery policies comply with your own?

• Are you in a position to pay for the duplication of machines, data, etc.?

Analytics

SaaS: SaaS applications enable you to add or remove features so they meet your needs. They have fully developed, ready-to-use functionalities before the vendor releases them. Using a SaaS app, you don't need to hire outside experts or consulting teams to create the functionalities you need. Plus, they offer powerful reporting tools that make it easy to analyse data and usage.

On-Premise: If you have on-premise software, it will be more difficult to adjust. It would be best to make changes before installing a product, which would cost more money and time. You can also agree with the benefits of integrating AI features into your work environment: editing just one element means you have to change a lot more to integrate it into the previous system.

To make the decision easier, answer these questions:

• What kind of features do you need right now? And how likely is it that your requirements will change?

• Does your organisation have the budget to re-program legacy systems or change an entire network?

• Do you have staff with the software analytics knowledge and experience to identify and quickly resolve issues?

Wrapping up

It makes sense that even on-premise solutions still seem to be a comfortable option for companies who haven't yet moved to the cloud. However, SaaS is more advantageous in the long-term, and your short-term gains are outweighed by your longer-term losses.

To get the most out of software as a service, follow our SaaS implementation guidelines and learn how to manage your SaaS applications properly so you can minimise cloud spend and maximise their value.