On-premise vs cloud-based software solutions | What is the difference?

 Radiocoms Cory Pennicott, Unified Voice Solution & Architecture Engineer explores the differences and highlights factors an organisation must consider in choosing a suitable path.

In the last decade or so we have seen the emergence of cloud-based computing, and it has quickly become popular due to its alternative offerings of development, implementation, maintenance and payment for IT services in comparison with the more traditional, on-premise approach.

Moreover, business spending world-wide on cloud-based computing is expected to reach US$331.2B in 2022, up from US$182.4B in 2018 (Columbus, 2019). The big three cloud solution providers, Amazon, Alphabet and Microsoft, all reported year on year accelerated increase in revenue, that does not seem to be slowing. As an example, Alphabet generated US$4B in 2017, up to US$5.8B in 2018, then a rise of 53 per cent to US$8.9B in 2019 (Lardinois, 2019).

However, the wholesale adoption of cloud computing does not have it all its own way. It faces many challenges, as shown in a survey of IT executives on their opinions on IT cloud services. (Armbrust et al., 2010). The top concerns and challenges for cloud adoption, from this survey, are:

• Security (87.5%)
• Availability (83.3%)
• Performance (82.9%)

Key Differences of On-Premise vs Cloud

The key differences between on-premise and the cloud are effectively where the infrastructure, applications and software reside.

On-premise meaning.
On-premises (or more commonly misstated as on-premise) means that a company keeps its IT infrastructure, applications or software within their own control, onsite. This could be managed either by themselves or via a third-party.

Cloud computing meaning.
Cloud computing is the delivery of computing services over the Internet (the cloud). These services include databases, storage, servers, analytics, networking, software and intelligence. All of these services have the intention of offering faster innovation, flexible resources and economies of scale.

When it comes to the location of the cloud, it can be offered as Public, Private and as a Hybrid of the two. With regards to the services offered, clouds are typically classified into three main models:

• Infrastructure as a Service (IaaS)
• Platform as a Service (PaaS)
• Software as a Service (SaaS)

Diagram of Service Models of Cloud Computing (Chou, 2018).

Cloud Software Advantages.

Affordability.
Costs are generally lower for cloud-based software applications. Costs can often be lower monthly costs (often subscription fees) as opposed to large upfront licencing fees. Many companies offer the inclusion of maintenance and support alongside the lower initial costs. This will provide a saving on human resources over having to deal with issues personally.

Ease of deployment.
Cloud computing has the significant advantage that it can be implemented and deployed rapidly without the need to go through a long, tortuous installation process. Some cloud vendors allow customers to be up and running on their systems within minutes. This will enable businesses to gain an edge over the competition.

Management services.
A key aspect of cloud computing is the freeing up of time and resource. Vendors generally offer clients their management services, so there will be no need to purchase hardware or host software. The vendor will take care of all that as well as network monitoring and upgrades.

Cloud software disadvantages.

Less flexibility.
Users of cloud-based software often come up against the issue of customisation and flexibility. The software suppliers that provide via the cloud generally don’t include customisable options. With customers given off-the-shelf applications, services are usually catering for the needs of the industry rather than the specific needs of a specific customer. The downside is that a customer may not receive a service that is appropriate for everything that is required.

Long term costs.
Cloud-based software provides the latest software version to the client, with the costs rolled up in the subscription charge. However, when it comes to costs, there is a drawback to cloud-based software. There is the risk that in the long -term, subscription costs could end up costing more than if a licencing fee had been paid at the start. This is more so if the business never needed to rely on or never bothered updating to the latest software versions.

Security concerns.
Like all web-based technologies, cloud-based software has similar security concerns. Online security is always improving; however, there will always be those bad actors wanting to gain access to your system illegally. The recommendation, when looking at cloud hosting, is to use vendors with multi-factor authentication and support single sign-on (SSO). (Indu, Anand and Bhaskar, 2018).

On-premises advantages.

Greater customisation.
There is greater scope for customisation due to all the on-premises software being managed locally as opposed to the subscription to a cloud-based service. This is, of course, a more significant benefit if your business has particular requirements that are never generally covered by the appropriate options within the cloud industry.

License purchase versus subscription.
On-premises software models are generally associated with the host hardware vs the employee. With this type of concurrent model, the company has the freedom to reallocate licences. Usually, businesses operate the best practice of acquiring a small percentage more licences than initially needed to allow for growth within the lifecycle of the platform (Why you should be using a Concurrent-licensing model | C2 Enterprise, 2016).

Greater security.
One of the main reasons cited for continuing with on-premises is security. With everything kept in-house and onsite, it is less likely that bad actors will be able to access systems and data. It is also easier to target weak points and apply additional data protection tools on an on-premises system as opposed to a cloud-based.

On-premise disadvantages.

Long deployment times.
Compared to cloud-based, on-premises software is incredibly time consuming and cannot be deployed quickly. This could put the business at a competitive disadvantage. As with every software purchase, it takes time and expertise to configure the hardware, test the program and manage the rollout to every relevant employee.

Scalability.
On-premises software inherently does not scale that well when compared to a cloud-based model. In order to increase the number of on-premises users, IT staff would be required to, manually add hardware or software as necessary for the new users to use it. There is also the issue that software can become old and redundant meaning businesses could be left with software that’s no longer used or needed.

Remote offices and mobile workforce.
On-premise software is adequate when the business is in one central location. However, if the company has remote offices or a large mobile workforce, then there are additional challenges to providing access to these users. Adding network access to these distant sites start adding additional costs and complexities to the operations of the business.

Upfront costs.
As is nearly always the case, when purchasing new software packages and integrating to the on-premises system, the initial cost for the service is going to be high. Generally, over time, these costs even out. However, in this technological age, new software and systems are coming out all the time, and there is a high chance that new systems will hit the market before enough time has passed to recoup the initial investment in the software. A cloud-based subscription is a better recommendation for businesses that do not have access to large amounts of capital (McAfee, 2011).

Conclusion

Choosing a cloud-based strategy can offer a wide range of benefits; however, no two businesses are the same and will have different strategies and priorities. As cloud technology matures, users are offered a wide range of new cloud platforms to chose from, which is great for choosing the right fit for the business but also adds increased complexity.

It could be argued that it’s not so much a decision as to whether on-premises is better or worse than cloud-based, but which option will fit within your digital strategy and align with your business objectives even if this means selecting a mixture of different infrastructure.