Before we get into the debate – let’s admit – people like us from IT industry love creating new phrases – faster than we develop software. While we can not change that - we are trying to make it easy for you to understand this. For the un-initiated here is a quick description of the two terminologies :
On-premises – This is the way you have bought and used business application/software so far. Buy the license, procure a server, install, test and go-live. On-premise means – software which is installed a hardware box you have procured and possibly runs exclusively for you. Read more on wikipedia
On-demand – This is also known as Software-as-a-Service (SaaS). This is the new way of using the software. You learnt it first when you used web mail – that was the first popular SaaS (though wasn’t called so!). In this case you do not buy the license, nor do you procure the hardware – all you requires is a web browser to use the software. Most of the time – you’d pay for a subscription fee to use the software. Read more on wikipedia
Most often we are asked – how do you choose between the two. Here is a quick comparison between the two:
| Item | On-premise | On-demand |
|---|---|---|
| Software license |
Need to purchase |
Not required |
| Database license |
Need to procure |
Not required |
| Server | Need to procure |
Not required |
| IT infrastructure management |
Required | not required |
| Data backup |
Required | Not required |
| Control over IT infrastructure |
Complete | None |
| Integration with Other systems |
Tight | Loose or negligible |
| Customisation | High possibility |
Limited feasibility |
| Upfront investment |
Substantial | Negligible |
| Annual fee |
Moderate | Nil |
| Monthly subscription fee |
Nil | Low |
As you’d notice from the table above – On-demand v/s On-premise debate is not about functionality – but about application management. I have compiled a small list of leading questions which would help answer this question – which is right for me?
- Do you have a IT team to manage your server, database and application infrastructure?
- Do you have the budget to invest in server, database and application software licenses?
- Do you have the need for tight integration ( automated dataflow ) between various applications?
If you have answered Yes to most of the questions above – then you are ready for On-premises software. If you answered No to more than one of these questions – then SaaS is a better choice.
Having said that – being ready for On-premises software does not mean – you should not evaluate on-demand options – it might still present a better value proposition for your organisation.
But this is just the starting point – we’d bring more on this topic in coming days.
