The Pros and Cons Between Cloud and On-Premise Software Solutions | ScaleFocus
May 20, 2019

The Pros and Cons Between Cloud and On-Premise Software Solutions

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How well do you handle the peaks of your systems’ load? Are you certain that your software infrastructure landscape is configured properly? Do you often find yourself looking for more computing or storage resources, yet you just bought a chunk of new machines and/or more cloud storage?

If these questions sound familiar to you, you probably need to re-engineer your software infrastructure.

One of the major IT problems most of the companies today are facing is how to evaluate what type of software solution they will need to choose in case they want to migrate their main business solutions to the next level. Actually, it concerns most companies not only when migrating but considering daily operations in general.

Before I expand on the answer to this question I need you to think about the following questions:

  • What is the operations model of the majority of the software you use – deployed on public, private, hybrid cloud, or simply running on-premise without a clear model?
  • What part of your software is managed by external vendors? Where do they/you store the data (especially the sensitive one)?
  • What is your data storage policy and how do you relate it to market regulations?
  • Do you have a cloud strategy or guidelines within your organization?
  • Are you fully aware of your current computing and storage needs? Are you aware of the pace of which you need to increase your infrastructure in order to meet your future demand? Do you have a plan for that?

Most companies are in a mess when it comes to a coherent answer to the questions above. To top it off there are a bunch more when considering a flawless software infrastructure strategy, cutting operational costs related to infrastructure and having a holistic cloud and data strategy.

It is important to start with solid definitions for each deployment method:

On Premise Business Software and Hardware Solutions from ScaleFocus

On-Premise Software Solutions

More control, less scalability.

What does an on-premise solution mean? This is the traditional method for deploying and running business software. It has been proven to work over the years. Companies buy servers and other machines, organize their own data centers and use these assets to run their internal and external software solutions.

Most of the time when they need to update their software, they need to update their servers, too. Why? Because today, software applications collect a lot of data and need resources to run smooth.

It is very important to understand that your enterprise use or will use your own physical servers which can be located either in your own facilities or in a data center, where you can rent a machine and use it for your business’ purposes. If you choose to upgrade or build your private server space and install your software infrastructure there, you will need to consider and cover the maintenance and electric energy costs, you need to organize safety environment and invest in security, plus you will need to service your facility on a regular basis.

Of course, on-premise solutions will give you the maximum level of security and data privacy that you or external contractor can build and operate under your sole control. You will also have 24/7 physical access to your machines and the software installed on them. But this is an expensive solution. You are responsible for everything and in some cases, you will not be able to do the most important for your business thing – to focus on growing your business and build great products and services.

Pros:

1. Cost

  • Lower long-term cost – One-time license fees and annual maintenance fees for on-premises perpetual license models are generally lower than the cumulative recurring costs of SaaS software, with the break-even point typically occurring between two and three years after purchase. However, it all depends on the load you will occur, this is not the case should your organization scale and need tons more of processing power.
  • Little to no monthly costs – On-premises solutions deployments are typically structured on an annual or multi-year subscription plans, eliminating the need for monthly cost as in the Cloud SaaS models.
  • Virtualization – Owned hardware (servers) can be virtualized and shared for other internal needs at the owners’ discretion.

2. Deployment and Scalability

  • Control – On-premises deployments impact a higher degree of control for the customer in terms of timeline and rollout. The longer deployment timeframe adds more time for knowledge transfer to in-house personnel.

3. User access

  • Internet connectivity – On-premises can run without Internet access when it comes to internal systems. This is useful to keep. Mission critical apps running – particularly in areas where internet connectivity is not reliable, but your local network is running well.

4. Security

  • Customizable – Security can be highly customized to an individual organization’s processes, requirements, and regulatory compliance.
  • In-house – Knowledge of systems and data resides solely in-house. Maybe preferable for companies with security needs where they do not want data to shuffle over the Internet or want to restrict Internet access to their systems, databases or applications entirely.
  • Control – Choosing to run software on-premise you will be in full control as it is installed on your own server.

Cons:

1. Access

  • Speed – Organizations with extremely high bandwidth or large numbers of users accessing the same applications or data sets simultaneously. If this is the case, on-premises solutions can be faster than their cloud counterparts.
  • Access – It will not be easy for your employees to access your on-premise software from outside the office. They will need to use and set up tools like Microsoft’s Remote Desktop, VPNs or other remote access software, which typically slows-down connection speed and if not, set up properly could be a weak link in your security.

2. Security

  • Policy – An organization’s security is only as good as it’s in-house security policy. For organizations with high-security requirements, solid security policy and in-house expertise will be needed.
  • Recovery and backup – Disaster recovery and regularly scheduled and secure backup plans are a necessity. With on-premise deployments, this must be architected and implemented by the customer. Therefore, your security is as strong as your team’s knowledge of security and the setup you prefer and choose to implement.

3. Cost

  • Budget and Depreciation – On-premise solutions are subject to depreciation over time. They are considered as capital investments. Meanwhile, the subscription fee you spend on SaaS is considered an operational expense that is not subject to depreciation. So, it’s important to consider your annual budget to see which is more feasible. It is a game of OPEX vs CAPEX.

4. Deployment and scalability

  • Upgrades – On-premise solutions typically have a slower cycle to release updates. The updates may require hardware and software changes and will involve heavy IT involvement to execute.
  • Customization – Vendors will typically work with customers to create highly customized solutions. However, this can become expensive and may inhibit or slow down the move to upgrades of other software/systems in the future.
  • Longer implementation – On-premises deployments involve a larger time commitment on the part of the customer. On-premises deployments aren’t simply turned on because of the requirements need for planning personnel, facilities, hardware, etc.

5. Hardware

  • To run on-premise software solutions, you will need to purchase appropriate hardware. This is going to cost you a lot and the lifespan of similar solutions is about 5 years. After that, you will be obliged to re-engineer your solutions and replace this with new hardware. Moreover, if your business grows you will have to upgrade your hardware many times.

6. Performance issues

  • You will need to consider time for tests and improvements. Very often you will need to optimize your systems to perform faster or save other precious resources and relay less on computing power.

As a general rule of thumb, if you choose to implement an on-premise software infrastructure model, you are going to be responsible for everything related to the running of the software. You have to be prepared and you must purchase additionally the network infrastructure, servers, power supplies, operating systems, database software and more. But there is one more thing. You must purchase a license to use the software. There are operation systems, server applications, monitoring software and much other software that you need to consider and pay upfront or on a monthly/yearly basis to run your whole infrastructure. Moreover, some vendors offer different license prices based on the users’ number. And if you are running a big organization, the price will be too high. A typical software infrastructure installation is with a layered architecture. It consists of various layers, each of which corresponds to a different service or integration.

Cloud Business and Software Solutions from ScaleFocus

Cloud Software Solutions

More flexibility, less control.

What does cloud services mean? According to webopedia,

A cloud service is any service made available to users on demand via the Internet from a cloud computing provider’s servers as opposed to being provided from a company’s own on-premises servers. Cloud services are designed to provide easy, scalable access to applications, resources and services, and are fully managed by a cloud services provider.

More about cloud computing and cloud technologies you can find here.

A could service is any software service or solution delivered to you via the Internet, hosted at a public, private or hybrid setup. You probably are tired of hearing the buzz word Cloud. But cloud computing is now evolving like never before. Today, companies of all shapes and sizes are adapting to such kind of services. Experts believe that these trends will continue to grow. Many companies already run most of their business solutions on cloud services like Amazon Web Services, Microsoft Azure or Alibaba Cloud. Meanwhile, there are still many advantages over using your own in-house servers and equipment.

Pros:

1. Security

  • Secure environments – Many cloud service vendors have a very high level of security and sophistication. SaaS vendors may be leveraging these platforms to deliver their own services.
  • Cloud services are updated, patched, backed up by suppliers regularly. You don’t need to worry about your data and other routine maintenance procedures.
  • Although you have the entire control with on-premise solutions with public clouds you rely on the security standards set by the technological leaders. Especially if your team is small and not as experienced in security, using the public cloud in this essence should provide better security overall.

2. User access

  • Mobile devices – Cloud services require internet connectivity. With wired and wireless broadband becomes cheaper and available virtually anywhere. It provides easy and remote access via multiple devices.
  • Flexibility – You can provide your colleagues with different access credentials, without having to worry about upgrading your hardware, software and other infrastructure.

3. Cost     

  • Lower upfront cost – Cloud costs are classified as OPEX, reducing the need for the approval of large CAPEX during a given year.
  • Storage costs – Cloud storage costs continue to decrease. Extra storage can be easily added with no hardware to purchase. Compared to on-premise solutions, it is relatively cheaper to start using cloud services, because you are paying only for what you use.
  • Support and maintenance – These costs may be included in monthly costs and not as an additional fee, making budgeting easier.
  • Generally speaking, the cloud becomes cheaper as your loads grow.

4. Deployment and scalability

  • Faster setup – Cloud services can typically be deployed in a matter of days (weeks, months for more heavy customization projects) because software or hardware does not have to be installed onsite.
  • On-demand – Cloud services are highly scalable. Organizations can simply request more seats or storage and attain them rapidly.
  • IT environment – Cloud services typically require less IT involvement and less in-house technical skill for deployment, updates, and changes. Software updates and backups are done by the vendor and updates and maintenance usually is done more frequently than on-premises.
  • Minimal hardware infrastructure – To run your business processes smoothly, all you need is a PC or Mobile Device with a good internet connection. You still don’t get it why? Because your services will be hosted on someone else’s server.
  • No performance issues – In general, you should always get the optimum performance of the cloud solution you have chosen. Why? Because this is a part of their service offering and you have paid for this. Moreover, it is deployed by a large data center that is always monitored and upgraded to deliver maximum performance.

5. Immediacy

  • You can start using cloud services for the needs of your business, right now. You just need to subscribe to one more of these service providers.

Cons:

1. Security

  • Policy – An organization’s security is only as good as it’s in-house security policy. Event relatively secure cloud services are not a substitute for a robust in-house security policy.
  • Industry – Many cloud service providers do not have heavy vertical industry experience with the public sector, healthcare or finance. Industries with high-security needs may need to work with vendors for data storage, security and location needs.
  • Control – With cloud services, software and data can reside in the hands of the vendor, not the customer. Some customers may not be able to ascertain exactly where (location) data is stored or who truly has access to it.
  • Transparency – In most cases, you don’t know where your data is being stored, how often it is being backed up and how secure the service is at all. In 2018, we witnessed breaches in companies like Facebook, Marriott, Quora, British Airways, and more.

2. Cost

  • Long-Term Costs – Although the initial investment is less the on-going costs could be higher, depending on usage and how you have developed your software.
  • Price Increases – Due to a monthly prices structure and a lack of control over the timing of updates and feature enhancements, customers can find themselves subject to more frequent price increases.
  • Premium support – While basic level support is typically included in the monthly costs, premium level support is actually an added cost.

3. Deployment and Scalability

  • Customization – Cloud services and software are typically configurable but are not as customizable as some organizations may require.
  • Integrations – Due to rapid release and update schedules of cloud services, existing customized integrations with on-premises systems or other cloud solutions can become unstable during upgrades and feature rollouts.

4. User access

  • Internet connectivity – This solution will never be going to work well without a good and reliable internet connection.

You don’t have to purchase any licenses or infrastructure if you decide to go with subscription-based models like Cloud Services. The total cost is paid either on a monthly basis or annually. Servers, network, and software maintenance are included in the total price. The only thing that you need to have is a high-speed and reliable Internet Connection. And If you are looking for more flexibility and test some ideas fast, you can consider your start with cloud technologies. But if you are running an enterprise level company, you need security and many other technological features.

More Details to Consider before choosing Cloud or On-Premise Software Solutions

More Details to Consider before choosing Cloud or On-Premise Software Solutions from ScaleFocus

The choice between cloud or on-premises work depends on the specific needs of your organization. Today, many companies decide to use a little bit of both. The final result must be a good mix of control, business flexibility, cost savings, and scalability. It’s all about meeting your targets and understanding what is needed to accomplish them. And to do so, here are more things to consider before choosing cloud or on-premise software solution.

Better security

The cloud is unquestionably different from on-premises solutions, so it makes sense that security would be different, too. It follows that organizations need to rethink how they’re doing things with respect to implementing security in the cloud or on-premise.

The difficulty of achieving genuine security increases exponentially because of today’s solutions are increasingly complex and connected. Conducting an infrastructure review can uncover vulnerabilities and provide you valuable insights for creating, improving or reengineering your software infrastructure to meet your Company policies and industry best practices.

To minimize costs and delays due to re-engineering or purchase phases you need to review your solution from a security perspective at an early stage. This way you will protect your company from the negative effect during coding and release phases.

Greater efficiency

One of the most daunting and pressing tasks for any enterprise is the continuous push for improvement of their employees and software and hardware efficiency. In a publicly available report by Forrester from 2016, to compete in the age of the customer and improve overall productivity, companies must embrace digital disruption. The report also stated that 2/3 of the businesses need to increase their software infrastructure efficiency. And this must be their primary goal in the next several years. Reducing costs, Cleaning up the IT environment, Minimizing Vulnerabilities, are mentioned as additional measures to improve your overall business performance, by the interviewed executives.

Increased productivity

Obviously, your company and overall business results will benefit from improved software efficiency and employee’s productivity. The question is how fast and secure to implement the latest changes?

Today, you can buy faster CPUs, faster Hard Drives, more processors and even more hardware gadgets to optimize your IT infrastructure performance, but to improve your software infrastructure performance, you need experienced engineers to debug your old software solutions and architect, create and implement the best software solutions for your business needs.

Old software leads to loss of productivity and higher maintenance costs. But, productivity and maintenance costs are not the only issues. In Cisco’s survey, 92% of the sample group, declared that they found some software vulnerabilities while they were using the software. The average number of issues they declared was 26.

Support

Support issues are broadly discussed all over the Internet. Most of the old software solutions lack customer support due to outdated technologies or vendors, who doesn’t operate on the market or doesn’t offer these services anymore.

Cloud providers run their services on current hardware infrastructures. They invest heavily in infrastructure improvements, maintenance, support, and other precious assets. This is their way to be competitive on the market and sell their cloud services. Contrary, if you choose on-premise solution for your business, you need to plan and budget for at least one support engineer, who to hire, pay salary and invest in software and hardware for maintenance and performance optimization of your on-premise infrastructure.

Considering that, software providers test their applications on current and most recent operating systems. They don’t spend precious resources like time and money to test their software solutions on elderly systems. And If you want to buy new software to optimize some of your business processes, you will face similar problems.

Cost

Reengineering or changing your solution may sound expensive, but the truth is that older solutions are expensive. They already are outdated, maybe full of bugs and issues that consequently cost you more. If you still believe that you can keep working to full capacity and squeeze your software infrastructure limits, you are wrong. The cost of disruption caused by unstable systems and software can very quickly become more than it would to invest in an upgraded on-premise system or cloud solution.

The latest on-premise technologies are better optimized and use fewer resources. Most of their functions are automated and you will be able to cut operational costs, salaries, and other expenditures. As an additional benefit, you will lower the human errors from where you will be able to save precious resources. Same could be said and for Cloud solutions. Cloud service providers compete between each other to gain bigger market share. From this, the price of their services is going down.

Enhancements

Latest software solutions are features rich. They allow you to upgrade them with additional enhancements that weren’t possible in older software solutions. If you use older technologies, you will not have the functionalities that could give you a competitive advantage. Moreover, older software infrastructures are not designed to be upgraded. They are so-closed “closed” systems and to update them with new features is almost impossible.

From this point, you will face many compatibility issues. When some new technology comes on the market, existing systems and software solutions may not be compatible with it. A good example of this is Apple Inc., and one of its services iTunes, that constantly update their operating systems and apps. In this case, if you are using an older version of their mobile devices you will not be able to upgrade your hardware and use the latest applications. And this will get you to the point where you need to buy a newer device or keep using your outdated device as a regular cellular phone.

Warranty

If you use the latest software versions in your business activities, you probably can use your warranty. This will allow you to fix any issue or request quick fixes in case of emergency. Why? Because you expect a lot from your software environment and rely on it to run your business process without interruption. And, of course, this is a reasonable expectation.

The problem is with the old on-premise solutions. Most of them are not covered with warranty policies. According to IBM researches, this will lead you to 75% more issues, that require somebody to fix them, 40% more resources spend to find and fix these problems, and other related issues.

Contrary, if you have an active warranty policy or you use cloud services and solutions provided by third party, you will get on-time fixes, proactive services, call center support, and sometimes highly skilled engineers onsite. This definitely is more reliable and better decision compared to keep using outdated software solution.

Reduced power usage

Electricity is becoming very costly for businesses all over the World. Prices are going higher and higher. Consumption, too. The good news is that newer computers, servers, and other technical devices consume less energy. This means that you can save money and invest them wisely to grow your business.

In a report called The Impact of Source Code In Software On Power Consumption, authors Haryi Acar, Gülfem I. Alptekin, Jean-Patrick Gelas, and Parisa Ghodous prove that optimization and modernization of software’s source code will lead to better infrastructure performance.

Business growth

Are you ready to grow your business? Do you hire? If yes, this is awesome. But what about your software applications? Are they designed to grow with your business? Do you have account permissions for all your new teammates? The chances are, you don’t. Or, if you have some spots, you are almost using all limits.

The question is not about how many memberships you have. The question is about, does your system designed to support more. If not, it will struggle. It will start working slow, and very soon it will collapse. Yes, because it is an old-fashioned solution that doesn’t support your current business needs and doesn’t allow you to grow your company.

Conclusion

There are many things to consider when choosing the best solution for your business needs. Cloud, On-Premise or something in between, you have to comply with many variables and business growth plans. Moreover, you will need strong engineering expertise and skill set to predict your future needs and to build a good foundation that will allow you to grow. The customer-centric, constantly changing world requires companies to be flexible and to act fast if they want to keep their market share. This is why it is extremely important for you to put into consideration all of the above-mentioned variables and redesign your software infrastructure.

If you still don’t know how or from where to start, you can use the form below and request a free consultation with our expert engineers. You will discuss your needs and issues and our team of excellence will suggest you the best possible outcome. Act now and keep your market share. We are here to help you succeed and reengineer your software infrastructure implementing latest standards, technologies and procedures.

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