When it comes to your IT strategy, choosing between Software as a Service (SaaS) or On-Premise IT solutions is a major business decision as it can have a significant impact on your business operations and processes. This is particularly true in businesses and organizations that require consistent, reliable IT solution or are in need of a competitive advantage.
An IT analyst from Firewall Technical emphasizes that when it comes to IT solutions there is no magical or one-size-fits-all formula that works for all businesses. Some businesses may work efficiently with an in-house hosted solution, while others may best be served by off-premises SaaS solutions. So, it is critical that you consider your actual business operations when choosing between SaaS and On-Premise solutions.
There are several factors you’ll need to consider. But before that, let’s take a quick look at how these types of IT solutions differ.
Defining On-Premises, Off-Premises, and SaaS
Basically, on-premises solutions are in-house hosted solutions that are supported by a third party. These are software applications that you normally purchase and install on a computer or machine, such as Microsoft Windows 10, Microsoft Office Suite, AutoCAD, and more. As the name suggests, on-premise solutions are located within the building or premises. Usually, these solutions can only be accessed within the premises unless it has remote access feature.
An off-premises solution can either be a cloud-based solution or a software solution that is hosted on a dedicated hardware, not within the premises of the business and may be supported by a third party. Authorized users can remotely access the servers but they lack full control over what happens at the backend.
SaaS is a type of off-premises solution that is hosted in the cloud and maintained by the same provider. Some examples are Office 365, Salesforce, and Adobe Creative Cloud.
Users can remotely access the solution without the need to request information from enterprise servers. Since a third party maintains and hosts the solution, admins don’t have to worry a thing about how to manage the software. For example, you don’t have to think about where your data will be stored, whether they will be hosted on the cloud or stored on local servers. This also means you don’t need to invest heavily in human resources and IT infrastructure to maintain your IT solutions and data. It is the SaaS vendor’s ultimate goal to deliver the best service and enhance user experience.
On the other hand, a major deal breaker for off-premises solutions is that users don’t have complete control about what’s happening at the back end. SaaS may not be applicable to businesses that are restricted by stringent compliance regulations or want full control over their data.
Factors to Consider When Choosing Between SaaS and On-Premise
Now back to the question, which is better for your business? There are some factors to consider when comparing SaaS and On-Premise solutions.
In terms of upfront costs, on-premises solutions cost more than SaaS. With on-premises, you pay up the entire fee upon installation. With SaaS, you are billed a fixed fee on a monthly basis. But while the initial costs of on-premises seem high, in the long-term, you could be paying more on a SaaS solution than just buying the hardware and software outright.
On-premise solutions are considered capital investments. And like any other asset, it is also subject to depreciation. Meanwhile, the subscription fee you spend on SaaS is considered operational expense that is not subject to depreciation. So it’s important to consider your annual budget to see which is more feasible.
Maintenance and support
With on-premise solutions, you will need a competent IT staff or department, or a contractor to maintain the software or hardware. You are responsible for everything, from installation to implementation to maintenance. This isn’t a concern with SaaS as the provider takes full responsibility in ensuring the efficiency, security and disaster recovery of the solution.
Scaling up an on-premise solution require a long-term planning. Implementing any upgrade also entails challenges that can even impact business operations. Meanwhile, SaaS solutions are typically easier to scale up or down depending on the needs of the business.
A drawback with SaaS solutions is that they are less customizable. This means that if your business has a particularly unique use case, SaaS may not be applicable. On-premise solutions are probably the better option for businesses that require unusual functionality or integrations.
Security and Regulatory Compliance
Some of the best SaaS solutions come with high-level security technologies. The providers ensure that they enforce all regulatory requirements and standards. With on-premise solutions, you are responsible for ensuring that your IT system has top-notch security in place. You need to have a dedicated IT staff to implement regulatory requirements. The only advantage of an on-premise solution is that enforcing regulatory requirements tends to easier.
These are just several of the considerations to take when deciding between on-premises and SaaS solutions. It’s vital for businesses to thoroughly assess and evaluate their IT needs and business processes when making this major decision.