On Premise Vs Cloud : Basic Differences and Benefits

In the modern age of enterprise IT, there are many factors that an employer must consider deciding whether a cloud infrastructure or on-premise would be the right fit. Conversely, many employers are unable to leap into the cloud instead of depending on their tried-and-true legacy on-premise software and application to do business.

What is On-Premise?

With on-premise software, from implementation to running operations of the solution, everything is made and done internally; by which maintenance, security, and updates also need to be taken care of by the in-house team. Once the software is acquired, it is then installed on your in-house servers; demanding extra power servers, database software, and other application systems to be purchased, with no third-party contribution, you assume complete possession.

What is Cloud Computing?

Cloud computing is the process delivery of on-demand computing resources, requiring no dynamic administrations, and usually includes applications like storage and processing power. If you employ a cloud-based model, there is no need to acquire any of the additional infrastructure or licensing requirements. With a minimal yearly charge subscription fee, a cloud provider maintains online storage, network, and software for you. The information hosted by the third-party vendor can be accessible through a web portal. The dedicated private cloud providers allow clients to use the platform comprehensively, with no shared resources. They can demand additional customizations, software upgrades, and backup controls. With a shared cloud service, you can expect complete privacy of your information; however, multiple clients share the cloud service. It is an economical option yet provides limited customization.

What is Cloud-Based Enterprise Resource Planning (ERP)?

Enterprise Resource Planning (ERP) software can deal with different products ranging from accounting to systems that analyze those that handle inventory or the supply chain. Cloud ERP provides cloud computing platforms and other services – which facilitate flexible business operation transformations. Cloud ERP empowers businesses to access the software through the internet. Since computer applications are licensed and not purchased, the expense is lower. Organizations also benefit from business basics and critical applications that the cloud ERP vendor has on offer to provide. Regardless of the small-size or medium-sized business, cloud ERP solutions come with intelligent technologies that can take your business to greater heights.

What is On-Premise Enterprise Resource Planning (ERP)?

On-premise, ERP software is deployed and maintained by an in-house team at a physical office rather than being hosted on a vendor-provided cloud. It runs under the supervision of an in-house team. The data and the ERP remain under the business influence. On-premise ERP permits specialized integration with different existing business systems.

Cloud Vs On-Premise

There are two considerable differences between cloud and on-premise software; the expense for each varies and the level of ownership.

Cloud: For small-size businesses – the businesses utilizing a cloud service is more helpful as it provides complete functionality at a sensible cost as there is no upfront investment needed. Additionally, cloud software is priced under a monthly or annual subscription model, covering training, support, security, and updates. The dedicated cloud supplier would offer agility and enhanced scalability. Therefore, by employing services like cloud computing – you get flexibility; time, and it is cost-effective.

On-Premise: On-premise services mostly come under an upfront perpetual license cost. Also, the organization remains responsible and bears the expense of training, support, and updates. On the other hand, on-premise applications are assumed to be reliable, secured, offering full controls, and complete ownership.

Significant Differences Between On-Premise and Cloud

Some businesses still opt for on-premise arranged solutions as opposed to the cloud. Both cloud and on-premise bring something unique to the table but only after consideration can you determine which type of solution would be an ideal fit for your company. Below are some of the significant kinds of stuff that you need to consider while choosing between cloud and on-premise solutions.

Difference #1 : Deployment

On-premise: Employing the on-premise, the company remains responsible for managing different business processes. The deployment occurs by an in-house team utilizing the company infrastructure. 

Cloud: In the hosted cloud model, the service provider maintains the systems on their cloud server, accessible by the enterprise at any time with related processes dealing with the host cloud service provider.

Difference #2 : Control

On-premise: on-premise environment, enterprises benefit from complete control over their systems and maintain privacy. These are the two concerning reasons – why big corporations choose to stay away from the cloud. 

Cloud: In a cloud computing model, even though the data and encryption keys are mostly shared with the third-party supplier. There is shared ownership, and accessibility remains an issue assuming any downtime.

Difference #3 : Security

On-premise: Security is an essential need of any company – concerning the aspects of financial accounts, clients, and employee details. Though traditional on-premise seems more satisfying as it is in-house, multiple efforts are needed to maintain the security of the data. 

Cloud: With the cloud ERP model, there are exceptionally fewer possibilities of any hardware, software, or infrastructure malfunction that can hinder business operations and result in hefty expenses. The cloud ERP vendor will have multiple disasters and redundancy protocols for information security. For both models, reliable network connectivity plays a significant role in remote areas.

Difference #4 : Compliance

On-premise: There are regulatory controls that most organizations need to maintain. To meet the need of government and industry guidelines, organizations must remain compliant and have their information set up. It can be acquired if all the data is managed through regulations in-house. 

Cloud: When choosing a cloud computing model, organizations need to ensure that the service suppliers are compliant with the regulatory guidelines within their specific industry. The information of customers, partners, and employees must be secure, ensuring data privacy.

Difference #5: Cost Compromise

On-premise: An on-premise system configuration from the initial stages requires a great deal of effort at a higher cost. Not just the initial investment, along with the purchase of extra infrastructure and processes yet, but also the maintenance and operating expenses that the organization will have to incur on an ongoing basis. 

Cloud: Comparatively, Cloud services are much more cost-effective, especially for small-size businesses. Configuring up and run time is cheaper and quicker. Organizations must pay a monthly subscription fee by which the updates and maintenance look after by the cloud host provider.

Is cloud computing less expensive than on-premise?

Cloud computing is cost-effective while configuring, running, maintenance, and support costs. On-premise, even though costing more initially but when the investment is spread across the entire life-cycle of the system, it might amount to equivalent to cloud computing. Also, it depends upon the services and space required and the plans that the vendor has to offer. There is a straightforward solution to this as the expense viability ultimately depends upon the needs of individual organizations.

Difference #6 : Mobility

On-premise: On-premise ERP model can be accessed remotely but often requires third-party support to get the arrangement and a mobile device. This will elevate the risk of security and workforce to access files on private devices. 

Cloud: With the cloud model, you just need to have internet connectivity to access your data using a mobile phone. Mobility and flexibility both are strong factors of this solution. This empowers your workforce to work from anywhere at any time, resulting in higher engagement rates.

Cloud Software Vs. On-Premise Software

The fundamental difference between a cloud and on-premise software is where exactly it is going to be installed, located physically on the servers of an organization, or hosted on the vendor’s server. Software ownership, security, cost updates, and additional services are also things that vary. When compared to the cloud, on-premise software is more flexible, reliable, and secure. Whereas hosted cloud software removes the pressure of maintaining and updating your systems, allowing you to focus your time, money, and effort on fulfilling other core business strategies. You will have real-time access to systems through the internet, a cloud software requires just reliable internet. With elevated adoption rates, the more popular among the two today is the cloud.

Cloud Software Benefits

Accessibility: By utilizing cloud software, information is accessible from anywhere, at any time – using any device or a web browser. 

Affordability: By utilizing cloud hosting, there is no upfront expense, by which reasonable payments have to be considered consistently like any other operating expense. These services include costing for maintenance, licensing, daily backup charges, and support services. 

Maintenance: Since it is a hosted software approach, there is no need to invest time in maintaining hardware or software installed on it. A cloud service provider is responsible for software upgrades and compatibility. 

Security: Cloud service provider utilizes security measures that the organization would find extraordinarily high if it were to be done by an in-house team. Subsequently, the better the measuring efforts – the better security it offers. 

Deployment: Cloud software can be deployed in a limited time as it is accessible via the internet, by which there is no requirement for a physical server to be set up. 

Scalability: Cloud technologies provide greater flexibility as these can be scaled upon demand according to the preferred needs. 

Costs: Since the critical need to maintain on-premise or physical servers is eliminated – the cost of other resources and power is not on the list.

Cloud Software Drawbacks

Connectivity: There is a need to have reliable internet access.

Costs: The absolute-ownership cost may be higher when compared to an upfront expense if spread over the entire system life span. 

Customizable: Complex development needs in some cases do not match a cloud solution.

On-Premise Benefits

Cost: The overall cost of ownership is less when compared to the recurring payments if spread over the system life span. 

Control: Since it is your data, hardware, and software platform, you have absolute ownership and control; any transformations, software upgrades, and configurations are carried – out at your discretion. 

Connectivity: There is no dependency on external factors, such as the internet availability to access your servers.

On-Premise Drawbacks

Cost: There is a massive upfront capital cost to sustain, including maintenance, power, and other functional costs.

Maintenance: Software update, hardware, storage, security, data backups, and disaster recovery must be maintained on-premise. With less budget and limited technical resources, this can transform into an issue, especially for small businesses. 

Deployment: As the software needs to be installed on individual computers and servers, the deployment takes a longer time.

On-Premise Solution Vs Off-Premise Solutions

When choosing between the two – on-premise or cloud solutions, here are the three key factors that need to be considered to make the right decision for your business.

Flexibility 

On-premise offers a dedicated system that you have full control of, even the hardware. It is, therefore, suitable for big giants that have various applications and complex workloads to run and are larger in size. The ability to carry changes and updates remains limited, requiring the latest and additional technology purchases to be made concerning given storage and workload necessities.

A cloud system offers unlimited capacity, depending upon the vendor’s offerings and service subscriptions plans. However, the controls are flexible and can only be operated only remotely over the hardware that resides within the third party. The vendor manages, and in many cases, the hardware resources will be shared with other clients, unless you opt for a private cloud option.

Security

While choosing cloud services – you will have to make sure that the vendor has the required latest updated security certifications. Scrutinizing security measures at every part maintained by the vendor is very important before entrusting your sensitive information to them. Data transmission and credentials security among access points is another significant aspect that needs to be considered.

When physically residing within the enterprise and associated with the organization’s local network, it is simple to observe organizational-approved credentials, since the organization is completely responsible for its security. However, extra protocols are needed if the systems and data are being accessed via remote locations. 

Cost

With on-premise, your organization remains responsible for incurring in and out costs, from the initial upfront investment to operating expenditure and maintenance. Operating data centers or large systems generally reach millions of dollars.

Especially for small businesses, employing cloud service servers is considered a far more economical option. It is cost-effective, quicker, and can be accessed from anywhere and at any time via the internet, additionally deployment and run-time are shorter. As the organizational needs transform over time, service can be scaled to meet the diverse needs, and subscription plans are handled accordingly.

On-Premise to Cloud Migration

More organizations are now migrating their services and systems to the cloud because of their traditional methods and environmental limitations. It is an essential move that needs to be aligned with the rest of the business processes and accompanies a set of its challenges. Migration on a hosted server can get enormous advantages to your business, listed below are a few:

• It is a quicker process by which new additions like storage space can be dealt with very quickly. It enhances the agility to respond to the transforming needs of your business.
• Overall performance improves with the removal of region-specific dependencies provided by cloud solutions.
• Some cloud hosting vendors offer robust built-in security systems, providing visibility and security insights across the entire cloud environment.
• Cloud package provides several useful features like automatic logging, monitoring, disaster recovery, continuous deployment, security, and others as a part of their solution.
• With the cloud method, the possibilities of downtime are very less, empowering you to use assets to the fullest. Henceforth, keeping your customers satisfied.
• The pay-as-you-use model offers flexibility for you to scale up and down as needed at a reasonable cost.
• The Cloud computing model manages your due diligence and makes sure that their third-party provider is up to date and compliant with all the different regulatory mandates within their industry. Sensitive information must be secured, and partners, employees, and customers must have their privacy ensured.

PMTT Cloud Services

Every successful business needs a scalable infrastructure that can support any kind of integration, data transformation, quick and secure file transfer, and end-to-end visibility of the information that flows into their dynamic environments. PMTT integration cloud services enable organizations to speed up ground-to-cloud and cloud-to-cloud integration processes to integrate applications, storage, and business platforms to connect and interface all your data, wherever you want it, be it on-premises or in the cloud.

PMTT integration cloud also features managed service and self-services for businesses and technical users alike, and allows them to create, control, and monitor B2B applications and cloud integrations.

Contact PMTT today to learn more about cloud applications and migrations.