Cloud vs. On-Premise – Software Advice

by Thanh Pham | Aug 07, 2020 Cloud vs. On-Premise – Software Advice

The debate between cloud and on-premises software solutions has been around for years. Increased adoption of cloud delivery models over on-premise solutions has further amplified this debate.

The difference between could and on-premise software is clear and simple. Cloud software is hosted offsite in a vendor’s server and can be accessed by a web browser. On-premise software, on the other hand, is hosted locally with your physical server and computers.

Both options come with their benefits and limitations. Increased adoption of cloud software suggests that it is more beneficial to host your servers in the cloud rather than on-premise. However, some situations may favor on-premise solutions compared to cloud-based solutions. Here is a simple analysis comparing the advantages and drawbacks of two options.

Advantages of Cloud Software

Affordable: With cloud service, the vendor is responsible for maintaining the server. The cost of the maintenance then translates to the regular charges, often monthly, that one has to pay. This is a cheaper and more viable option, especially for businesses relying on regular sales to finance their operations. The monthly charges also include maintenance and support services.

The cost of a cloud solution is also more predictable. Ideally, a monthly charge always covers the licenses, software updates, data backup and support.

No need for maintenance: With cloud software, the maintenance is solely the responsibility of the vendor. Therefore, you do not have to worry about software upgrades or compatibility issues as all that is handled from the vendor’s end.

Cloud Software is more secure: The cloud infrastructure has experienced a significant transformation with more innovative security solutions available today. Data centers employ top-notch security measures to ensure the integrity of the servers and the data hosted therein is not compromised. Further, in case of a disaster, it is easy to recover backed-up data.

Easy to scale up or down: Cloud technologies offer limitless flexibility meaning you can expand or scale down easily depending on your needs without affecting operations or significant investment in infrastructure. For instance, if you need to scale up, you subscribe to a bigger package. If it is scaling down, you subscribe to a smaller and more suitable package.

Quick deployment: Given there are no physical installations required, cloud-based software can be deployed over the internet within hours. You can set up and get going within a day.

Accessible from anywhere: Cloud Software can be used from any location, provided there is a reliable internet connection. Further, it supports access from multiple devices concurrently, making it suitable for a collaborative experience.

Drawbacks of Cloud Software

Requires internet connection to access: Without a reliable internet connection, it is impossible to access the software.

Costly in the long run: While the initial investment is comparatively low, the total cost of ownership (TCO) is high over time.

Advantages of on-premise software

Total control: Once installation is complete, you have full control over the data, software and hardware. You, therefore, get the privilege to customize and configure the server and the software to your specification. Also, you can upgrade or overhaul the system when necessary.

Also, on-premise software means external factors such as internet availability do not affect your access and use of the software. All you need is a stable power connection.

Total Cost of Ownership: Compared to Cloud Software, the Total Cost of Ownership is low for on-premise software. You only need to pay for the license once, or until the need to upgrade arises.

Drawbacks of on-premise Software

High initial capital investment: Characteristically, you will incur high expenditure costs to set up the infrastructure requirements to host the software. Additionally, the costs pile up with progressive maintenance.

You are responsible for maintenance: While there is enough room for customization, the responsibility for maintenance is also on you. You will be in charge of the hardware, software, backup, storage of data.

High risk of data loss: Unlike cloud software, security is a concern for on-premise solutions. Unauthorized access to servers puts the whole system at risk. Father, in case of a disaster, data recovery might be a challenge if backup in secondary sources was not done.

Limited flexibility: To access and utilize the software, you need to be present within the premises where the server is hosted. This makes it difficult to work remotely. Further, scaling on-premise software is more complex and expensive with modalities such as space, costs and integration coming to play.

Which is the better option for your business?

The evolving nature of businesses and increasing need for flexibility to work remotely and scale up or down easily makes cloud software more favorable. Further, it comes with better security options and eliminates the hassle of updating and maintaining the systems. For small businesses, cloud software solutions are the most viable.

However, the nature of your business also helps determine the most suitable option. If you are handling sensitive data whose integrity you want to protect, an on-premise solution becomes the most viable option.

The key items to have in mind when determining the path to take between could and on-premise software include:

  • Upfront costs

Which solution fits well within your budget as a business? Can you afford the upfront costs of installing an on-premise server?

  • Security

Security is one of the top considerations to make. Cloud services are now more secure, but there is always the risk of being hacked and your data being compromised. On-premise servers also require setting up and investing in ensuring continued security of your server.

Also, can you comfortably manage backing up data regularly? What are the disaster recovery measures in place and can you sustain them?

  • Upgrades

Do you need to upgrade and update the functionalities and features of your software? What are the associated costs of the upgrades and updates?

  • Priorities

Cloud solutions allow you to focus on other aspects of your business rather than your tech infrastructure. Can your business focus on maintaining its IT infrastructure without affecting operating efficiency?


On-premise and cloud software have varied applications. While they have unique advantages and disadvantages, the unique circumstances and nature of your business will inform the most suitable option for you. Alternatively, you can adopt a hybrid solution to enjoy the benefits of both alternatives, while addressing the unique needs of your business.

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