When you purchase a new software solution, choosing between an on-premises or SaaS (software as a service) deployment can be confusing. You need a thorough understanding your needs, capabilities, and key processes to make the right choice.
Software as a service
SaaS implementations are cloud-based. Rather than install the software on your servers, you pay a fee to use the software on the SaaS provider’s servers. The SaaS provider manages the hosting infrastructure and the software, so you don’t have to worry about maintenance, updates, and data security for the software or the server. SaaS software is usually paid for in the form of a subscription or annual fee. The software is hosted in a public or private cloud.
On-premises is the traditional model, where the software is installed on your servers. You own the servers and the software, and you are responsible for equipment maintenance. Software licenses are usually billed in a one-time payment with a much smaller annual maintenance fee. You usually need some IT specialists to install and maintain they software, either employees or outsourced resources.
SaaS solutions are located entirely on the SaaS provider’s hardware, so you don’t need hardware and you don’t manage system updates. On-premises software requires hardware, so you either need the resources to purchase the hardware or you need to have some hardware available with the room to install the new system.
SaaS software is less expensive to implement because you don’t need to purchase hardware. However, you pay a higher annual fee for the software. On the other hand, on-premises software requires a bigger initial payment through the one-time license fee and hardware costs, but the annual fee for maintenance is much lower than an annual SaaS subscription.
For example, you may purchase a new CTRM system for $500,000 with $100,000/year in maintenance. Over 10 years, the total cost is $1.5 million. The same system deployed via SaaS could cost $250,000/year. The first-year cost is significantly lower, but after 10 years the total cost is $2.5 million, $1 million more than the cost of the on-premises system.
Data security for SaaS solutions is often better than an on-premises system because SaaS providers use very strong security that is often very expensive for companies to purchase on their own. However, in many cases security compliance does not allow third-party hosting, so an on-premises solution is your best choice. With an on-premises system, you have complete control over your data and security.
Implementing a SaaS solution is usually faster than implementing an on-premises solution because there is no need to provide hardware and install the system on company servers.
However, if you already have a well-configured and secure server room, you may already have the hardware and IT personnel you need for an on-premises implementation, eliminating those implementation costs and time spent securing those resources. Additionally, if your infrastructure is compatible with the software, on-premises may be a better solution than a SaaS model. In the long run, the on-premises solution may also be more profitable.
SaaS solutions are usually fully configurable but not always customizable. On-premises software is highly customizable, so often has more options than SaaS systems offer.
Some companies do not want to use SaaS because of the loss of control. While SaaS solutions allow you to forget about hardware and software maintenance problems, using SaaS solutions means you are more dependent on external factors like internet access.
When choosing between on-premises or SaaS, take the time to assess your specific business needs and evaluate your current capabilities. Choose the option that will work best for your team.
At iRely, we believe the choice should be yours. We will walk you through the process to ensure you pick the pricing and deployment that works best for your business: on-premises, SaaS, one-time payment, or annual license. Own the software the way you want priced the way you want. Whatever your requirements are, we will deliver, ensuring you gain the solution you need the way you need it.