On-premises vs. cloud software

Nowadays you don't have to install every program on your PC or laptop. Many ap­pli­ca­tions are also – or only – available online, via the cloud. Anyone working with Google Docs or Microsoft 365, for example, is already using cloud software. This has clear ad­van­tages – but are cloud solutions always the better choice? We present the ad­van­tages and dis­ad­van­tages of both pos­si­bil­i­ties.

If it ain’t broke, don’t fix it? Many users and companies have been ac­cus­tomed to software on their own systems for decades and have never had any problems with it. You buy a product, install it on your home computer or office PC, and can work with it for several years. The advantage here is that you possess the software: Once you have bought the product, you can use the software without any lim­i­ta­tions. There is only a one-time cost. But is that really the case? Es­pe­cial­ly in the corporate en­vi­ron­ment where you have to deal with different licenses, programs cannot be used for an infinite number of work­sta­tions. Each employee may have to purchase a separate license – or you may purchase multiple licenses in one package. The on-premises solution is therefore not that cheap.

Good software is con­stant­ly updated: Updates extend the functions of the program, improve its stability, and fix weak­ness­es. These updates need to be installed regularly by the users, which is ad­di­tion­al work for them. In larger companies, es­pe­cial­ly, in­stalling updates and bug fixes can be a con­sid­er­able effort. In addition, the support doesn’t last forever. At a certain point, many software providers stop de­vel­op­ing the old software in favor of a new product. Then you have two options: Either you continue to work with an outdated version or you invest in the new product.

However, another advantage must not be over­looked: All data remains with the user. While cloud solutions require the trans­mis­sion of in­for­ma­tion to a remote server in a data center, with on-premises software you can keep all data with you unless you decide to use cloud storage. As a user of on-site solutions, on the other hand, you have full control. You always decide for yourself how to handle the software.

With cloud computing and SaaS, users now have other ways to use software: Instead of buying the cor­re­spond­ing program, in­stalling it on your own PC and then using it, you decide on a sub­scrip­tion. A provider hosts the software in a data center and offers users access to it. Your own PC or laptop only es­tab­lish­es a con­nec­tion via the browser, the actual computing power takes place in the data center. Your own hardware therefore only needs to provide internet access.

Not only is the hardware main­tained by qualified personnel, but also the software is always up to date. Updates are installed without the user needing to put in any ad­di­tion­al effort and are available im­me­di­ate­ly. Since the software is in­de­pen­dent from the PC, you can access the program from anywhere – you are neither limited to the device nor to the location. Without internet access, nothing works, which is a big dis­ad­van­tage of cloud software. This can be par­tic­u­lar­ly critical for pro­fes­sion­al users and companies: If the work suffers due to a poor internet con­nec­tion, this is un­ac­cept­able.

Pro­fes­sion­al software can be expensive. Although on-premises solutions are usually paid for with a one-off purchase, it is not always possible for smaller companies and founders to make such a large in­vest­ment. In addition, as the business and its re­quire­ments grow, the program you buy may not fit your needs after a while. With most SaaS providers, users can choose between a monthly or annual payment, allowing them to switch to a different product at rel­a­tive­ly short notice. Ad­di­tion­al functions or ad­di­tion­al employee access can usually be booked easily and in­ex­pen­sive­ly.

Choosing cloud software means trusting the provider and allowing them to have the control. Trust is so important because sometimes very sensitive and business-related data is stored in the provider's data centers. If the cloud software man­u­fac­tur­er doesn’t take data pro­tec­tion seriously, the con­se­quences could be cat­a­stroph­ic. Handing over control is also po­ten­tial­ly prob­lem­at­ic: If the provider decides to dis­con­tin­ue the offer or even to pause for main­te­nance work, this failure can have negative con­se­quences for the users.

Software from the cloud does not nec­es­sar­i­ly differ in the functions it offers compared to when it’s installed on your own computer, but the two solutions still have con­sid­er­able dif­fer­ences when it comes to other points.