Cloud vs on-Premise
We are hoping this easy to follow guide will help you weigh up the options available to you. One of the main considerations is engaging with a supplier that can provide the flexibility to offer both solutions. Widespread adoption of Cloud has led many vendors to shift focus from on-premise solutions to Cloud delivery models. It may be that a Cloud solution is not right for your organisation right now, but it may be a future development for consideration. Having the flexibility should be something worth thinking about.
If you are wondering which option is more secure, accessible, and affordable, explore our handy comparison.
Cloud Software Advantages
You can access your business applications anytime and anywhere, from multiple devices using browsers and mobile applications.
Cloud often requires low up-front costs and as a business, you may want your payments to be accounted for as an Operating Expense (OpEx) rather than a Capital Expense (CapEx) . Monthly license costs will add up over time with most suppliers offering maintenance and support services on the same basis.
By using a Cloud solution your costs are predictable and will include licenses, upgrades, support, maintenance and Cloud services fees.
Because Cloud software is hosted for you, there is often no need to worry about the maintenance of your software or the hardware on which it resides. Compatibility updates and upgrades can be managed by your provider.
Most data centres employ security measures beyond the affordability of most SME businesses. Your data will often be safer in a data centre than on an on-premise server.
Cloud based software can be deployed in a matter of hours compared to weeks/months for an on-premise solution, which will need to be installed and configured on a physical server.
If you have a growing business, Cloud gives you the flexibility to build upon your business software as you grow and only pay for what you use.
Lower energy costs
When you use a Cloud software solution, you will no longer have to pay to power your on-premise servers or to maintain their data centre environment. This will dramatically reduce your utility expenditure.
Cloud Software Drawbacks
Cloud solutions require reliable internet access for your solution to be productive. This may mean investment in your connectivity and can cause problems for more remote businesses without a reliable fast internet connection.
Total Cost of Ownership (TCO)
Although Cloud solutions can have a lower upfront investment, Cloud based applications can be more costly over the systems lifetime, which may increase the total cost of ownership.
Cloud software is typically less customisable than an on-premise solution. Whilst software solutions are more and more configurable, any major development will be a “”no go” normally.
With an on-premise solution you typically pay for perpetual or term licenses up front. However, Mitec’s partner, IFS, is now offering more flexibility with a subscriptions option for both on-premise and Cloud solutions, giving you the customer, more flexibility.
You take the wheel
With an on-premise solution, you can have complete control of your data, hardware & software platforms. You decide on the configuration, when you want to upgrade and when to make any system changes.
With an on-premise solution you could be less reliant on external internet connectivity or any external factors for the access to your systems, ultimately reducing downtime caused by factors out of your control.
Large capital expenditure
On-premise solutions typically require large upfront purchases unless you opt for a subscription model. There are few vendors who offer this for an on-premise deployment, which means Capital Expenditure (CapEx) is often required. Maintenance, Support and Upgrades are usually an additional cost which can make the initial investment significant and the ROI quite lengthy.
With an on-premise solution your business, or a third party, is responsible for the day to day maintenance of the server hardware and software, data backups, security, storage and disaster recovery. For a SME (small to medium enterprise) this can be expensive where there are limited internal IT resources and smaller operating budgets.
Time to deploy
On-premise applications often require longer implementation times due to the time needed to complete installations on servers.
If your business requires fewer licences over time due to business restructuring or changes in the market, you are fixed with what you purchased upfront. Likewise, if you grow rapidly, adding additional licenses becomes more complex and additional budget will be required.
Why is Cloud software a sensible choice?
Globally, the Cloud software sector is predicted to grow by 17% in 2020 (Gartner) and Cloud adoption is now so mainstream that Cloud has seen the largest increase in business application spending in 2019; 36% of companies that have used other means to host their software, have now moved to the Cloud (Gartner).
With benefits such as high availability, greater flexibility on pricing and reduced internal running costs, Cloud is increasingly seen as the “sensible choice”.
Why on-premise with flexible pricing is also a sensible choice…
Depending on a business’s individual needs, a Cloud solution may not be on the cards. On-premise gives companies increased control of their data and flexibility of deployment configuration, which Cloud does not. By working with a supplier that can offer both quality on-premise AND Cloud based solutions, your organisation has the best chance to grow flexibly, if Cloud isn’t right for you right now.
Which is right for my business?
There is no right or wrong answer to the Cloud vs on-premise software dilemma. Every company is different and has different requirements that will influence your choice of deployment strategy. Our advice and a good place to start, is to consider the following:
- How do you want to finance the software?
- CapEx vs OpEx – Can your business afford the upfront capital expenditure normally required for an on-premise solution or would an OpEx approach be more palatable?
- IT Skills and Costs – Do you have the resources required to manage, run and maintain your business systems?
- Infrastructure & Utility Costs – Do you want to save on IT infrastructure and utility costs that will be required to run an on-premise environment?
- Backup and Disaster Recovery – Do you have the tools and resources internally to ensure top level security and data integrity?
- Multi-tenant or Single tenant – If you are considering Cloud, will your data be stored on a shared server(s) or on server(s) dedicated to your business and ring-fenced from others?
- The Upgrade Cycle – How important is it for you to have access to the latest functionality and patch updates?
Contact Mitec today to discuss your ERP requirements and we can help guide you towards the best fit for your business.Get in Touch