According to Forbes magazine, cloud computing has grown over 400% in the past 10 years. Many small to medium businesses are quickly moving to the cloud which is a necessary means these days to remain competitive and yet others are still debating as to whether this move will be beneficial for their business. In this article, we break down the differences between cloud and on-premise software in order to understand how they can help your business.
Cost of ownership
Generally, cloud software are offered under a subscription model (just like your Netflix or Spotify account) - that is you pay a small fee every month or every year in order to use the software. For that reason, the upfront costs are more achievable and more accessible. On the other hand, on-premise software generally require a larger upfront "once-off" investment which of course is more cost effective over the long run.
Winner: It depends on your business in this case, or more specifically your cashflow, it is essentially cheaper to have the software on premise over a long period of time, but this is usually not feasible for small to medium businesses where a cloud (SaaS) offering can be much more cost effective.
Updates and maintenance
In addition to the costs above, any company MUST consider the other costs associated with running a cloud vs an on-premise environment. One of the predominant factors are software updates, cloud software comes with free access to upgrades which can happen painlessly and automatically overnight hence keeping you up to date at any point in time. On-premise upgrades obviously requires planning as someone (your IT partner or the software consultants) will need to login to the physical server and go through the update process. In addition to this service, updates for software installed on-premise may or may not be chargeable depending on the software itself.
Other costs are associated with on-premise deployments as the physical server consumes electricity and requires cooling 24/7. The server needs to be maintained as well which adds to its running costs. As for cloud environment, given this is hosted remotely, the maintenance and running costs falls on the host provider.
Winner: Cloud software is a clear winner here as you have access to the upgrades and it is a painless process which happens automatically with no or minimal maintenance and running fees.
Depending on the cloud provider, cloud software often comes with automatic backup facilities with a full time team monitoring the status of the servers. Most reputable servers also offers mirroring services or other replication features that minimises downtime. The security on an on-premise environment depends on your infrastructure. You can achieve a similar security level by ensuring you have the right backup strategies, hardware firewalls and proper antivirus software.
Winner: We will call this one a tie as you can replicate (or achieve similar results) for both your on-premise or on-cloud environment by using the right backup and preventive tools.
Another important factor to consider is the risk and length of downtime. As highlighted above, cloud servers may offer mirroring services which means that your environment can be replicated immediately in another location in case the current one is down. If this is the case, you will feel no downtime if something was to happen to the cloud server. Hosting provider have SLAs to guarantee an uptime rate of 99.9% or more, while the downtime of your on-premise environment relies heavily on your disaster recovery strategy which is most likely nowhere near the service levels of the hosting providers.
Winner: With virtually no downtime, cloud environment bears less risks here, it is hard to operate if your system is down and for that reason, cloud software tend to be a better choice so that you can keep running all the time.
Most cloud software (being newer in technology) are built with better network and server performance in order to withstand heavier loads compared to legacy on-premise solutions. As your business grows, you will likely need to add more users and require more juice on your server which seems to be an issue for on-premise systems where you would typically have to invest in another, more powerful server. Cloud servers allow you to boost the performance by adding more memory, more storage or more CPU power easily within a few minutes. The specifications of your cloud server are flexible which gives you the ability to grow and shrink your performance whenever required.
Winner: Another one for cloud software here as it gives you a competitive advantage in boosting the performance of your cloud server whenever required. In addition, cloud software are being developed with performance in mind so that you can run your business swiftly and consistently on the cloud.
There are many benefits to cloud solutions which are often overlooked when choosing between the two. At WMSSoft we still treat the deployment methods (cloud vs on-premise) as a case-by-case basis as an option might be the most suitable one based on your business model. Over the past few years this has tilted more in favour of cloud software which has quickly been rising in popularity,
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