Differences Between Saas and On-Premise 

Differences Between SaaS and On-Premise

15 Oct 2020 / By Matej Leskovar

When looking for software, you will find that there are different ways of implementation, including on-premise and SaaS, also known as Software as a Service.

SaaS is an exciting, rapidly growing area in the cloud-computing industry. Compared to the traditional method of installing the software directly on a computer or server, SaaS is delivered to the user via the Internet. This type of software delivery encompasses many advantages in terms of cost, time, ease of use, and maintenance.

COSTS

• With the SaaS model, there is usually no initial cost to purchase the app
  Generally, on-premises deployments require greater upfront investment (on-premises hardware and software usually involves paying all the money up front), especially compared to a SaaS subscription model. The main reason for this is installing costly hardware on-site. On-premises models typically require ongoing expenditure including maintenance, upgrades, support fees and license fees. However, with SaaS software, you avoid additional charges for upgrades, hardware and administration and license fees are typically bundled into the monthly subscription.
• SaaS is on a subscription base, meaning your business will pay an ongoing subscription fee, typically for 12 months or longer. On-premise includes a one-time perpetual license fee + maintenance…
• In the case of SaaS, it is flexible and predictable to pay a subscription according to the desired number of products, licenses, program users, processing power, disk space size… You only pay as much as you need and you do not need to buy expensive equipment. Services (licenses, etc.) are paid for with growth, as needed, but not in advance (in stock). Licenses for the use of the product can be streamlined, depending on the needs of the company (in the case of reduced needs or licenses, costs are reduced). In the case of annual subscriptions (advance payment) providers usually offer additional discounts.
• Flexibility of infrastructure needs
  In the case of SaaS, it does not require its own infrastructure and its own employees for the purpose of maintaining the infrastructure, creating archives, etc. The infrastructure is flexible and can be adapted to our needs.
• Staff
  If the software or hardware are on-premises, typically that is going to mean that the staffers to support it are employees, or at least contractors, and the company is required to hire them, directly or indirectly. If the software or hardware is SaaS, typically the hosting company is going to hire the staff, including paying staff salaries, hiring and firing, and managing. On the other hand, the advantage of hiring your own staff is that you then have control over them, and they aren’t splitting their time among multiple clients.

IMPLEMENTATION TIME

• SaaS is accessed via the internet, instead of having it installed and maintained through company hard drives.
• In the case of SaaS, the implementation time is much faster. With SaaS, the provider quickly installs the products in their pre-prepared environment (usually automated in a secure environment) and the customer only receives a link to the product. The process of preparing the appropriate environment in the case of On-premise takes longer.
• In the case of purchasing products (On-premise), the implementation process is usually longer. In most cases, the coordination and signing of contracts takes longer due to the required contracts of both parties, as companies are sensitive when other products are installed on their servers, so they also include additional fuses in the contracts. Each product needs its own system environment in which it operates. The systems of the company that buys such a product must provide the appropriate infrastructure, security (to ensure that this product does not affect the vulnerability of the system), which takes some time, as well as additional costs (sometimes the new product requires a purchase additional hardware and system equipment). Also, each upgrade of the purchased product can enable any intervention on the server or the computer where the product is installed. In the case of On-Premise, the product uses the server capacity from the company – the buyer of the product. This must occasionally increase capacity, buy more disk space, increase processing power, etc., which is difficult to provide in the long run. In the case of SaaS, this is very simple, as the SaaS service provider takes care of all of the above, including the archives.
• In the case of SaaS, the product is in the provider’s cloud environment, in a suitable, secure and in a controlled environment. The product is upgraded by the SaaS provider and does not have access to the client’s server (in the case of integrations with other products in other cloud environments or on the company’s server, data transfer and exchange must be provided and performed via secure connections). In the event of a hacker intrusion into the product, only that product may be damaged, but not other products on the server that the attacker (hacker) might encounter in the case of the installed product at the customer (On-Premise).

SECURITY

Opinion varies as to whether SaaS or on-premises is more secure. Certainly, to a certain extent, it depends on your organization and the hosting organization. In any event, with SaaS, the hosting organization will typically be responsible for providing security, while on-premises your company will.

In the case of On-Premise, some people may have a better feeling that they have programs “in the house” (usually a false sense of greater security).

• Your chosen SaaS provider manages access to the application, which includes performance, maintenance and security. Chosen software provider typically has stronger security measures and handles any tech issues.
• Good SaaS service providers tend to be more concerned about security, as they choose secure cloud services, perform regular intrusion tests, and so on. Namely, SaaS providers must take care of and be responsible for the size of all subscribers, and local only for their own system..

SERVICES, STRESS

• SaaS software can be accessed from multiple devices via SaaS applications, from anywhere in the world Modern web products are usually more user-friendly, adaptable to all smart devices (tablets, phones…), accessible anytime, from anywhere with a browser device and internet access.
• The SaaS provider usually tries harder and adapts to the wishes of the client, as the latter can quickly terminate the contract due to dissatisfaction. In the case of On-Premise, the program is bought and the buyer is more tolerant even in case of dissatisfaction with the product or services of the contractor, as he probably paid dearly for it, and the seller of the product has already earned in advance.
• Responsibility and care for the operation, security and archives, etc. is on the side of the SaaS service provider. SaaS relieves your IT department of stress, especially if that department is small or simply doesn’t exist.

PRODUCT OWNERSHIP

• In case of termination of cooperation with the software provider in on-premise enviroment, the product remains the property of the company. However, it is probably no longer maintained, which over time (also due to non-adaptation to system software) can reduce information security, no longer provide new functionalities, troubleshooting, etc.
• Buying something like hardware or some software often is considered a “capital expense,” because it is considered an asset that is subject to depreciation. Buying something for a fixed cost every month often is considered an “operational expense” and isn’t subject to depreciation.

MOBILITY

During the pandemic, mobility and teleworking from almost anywhere became even more important than before. The important difference between SaaS and on-premise is when and how often a user has access to it. Because SaaS is hosted by a provider and can be accessed through Internet connection, SaaS provides more opportunities to use the software, whenever and wherever.

Software that is set up on the cloud for access by other people is typically going to be easier for staff to run from anywhere, whether they’re traveling, working in a sales office, or working from home. The difficulties of trying to connect to an on-premises solution remotely (navigating through VPNs, firewalls, etc.) disappear when working in a cloud environment; an Internet connection and browser are typically all that’s needed to connect to the application.

Company Imagine

In our company, we moved our entire business to the cloud some time ago, so we do not depend on our own servers and IT staff to maintain them, so we can adjust the infrastructure according to needs.

The company develops and markets desktop products (ERP, CRM, real estate products…), which we sell (On-Premise) or rent (on the customer’s infrastructure or on leased servers), as well as online products, which we market as SaaS ( CRM software, Real Estate Asset Management software – iNep, iFacility,…).

We checked several cloud service providers, which is why we decided on IaaS (infrastructure as a service) for Oracle Corporation. Oracle Cloud Infrastructure (OCI) is considered to be one of the most technologically advanced and secure in the world. The mentioned infrastructure also includes online products that we offer to customers (iNep, iFacility, iDesk…) as SaaS.

When choosing between the On-Premise and Saas option, the latter is more advisable in the long run. Even large reputable corporations that offer both solutions tend to cloud services and reward customers or stimulate if they pass into the cloud.

When choosing a product, the most important things are, of course, its functionality, user-friendliness, and of course the security of the application and its data. Because of the latter, it is important to find out from the SaaS provider who the cloud service provider is, how often data archives are run, and where the data is stored. It is important for EU citizens that data and archives are located in the EU.

It is important that the cloud service provider is not a company with a server “under the table” and that it has the appropriate standards (eg https://www.oracle.com/cloud/cloud-infrastructure-compliance/). Because web applications are accessible over the Internet, are more vulnerable, so it is also very important to have suitable application security. It is recommended (risk reduction) that the SaaS service provider has regulated security standards, e.g. ISO / IEC 27001 (information security management), ISO / IEC 22301 (Business continuity management systems) and regulated application security and data protection, which (in addition to independent external auditors when assessing the mentioned standards) can be proven by intrusive (penetration) tests and written evidence of application security by recognized independent institutions that performed the tests.

SaaS is fast becoming the technology of choice for many businesses in place of traditional on-premises software. There’s no hardware to install or maintain, you simply log in and go. The SaaS software model does give you immediate business benefits with frequent updates, shorter deployment times and independence from IT. So, with all costs considered, SaaS software is generally the cheaper option for many businesses for both short term and the long term.