1 Visma.net Guide On-premises vs. cloud What you need to consider to make the right choice for your business
2 On-premises vs. cloud Today s dilemma demystified! Contents Introduction... 2 What is an on-premises solution?... 3 On-premises alternatives... 4 What is cloud computing?... 5 Software in the cloud: Software as a Service (SaaS)... 5 The good and the bad of Software-as-a-Service... 6 Pros... 6 Cons... 6 The hybrid approach... 7 On-premises vs. SaaS: Making the choice... 8 Conclusion... 9 Sources Introduction It is no longer a question of if your company will be adopting cloud based solutions; but a question of when, how many and which cloud based service and deployment model fits your company best SaaS, hosting, hybrid or other? The market for cloud based services is showing strong and consistent growth; however the on-premises delivery model still has a strong position, and along with cloud based solutions, is offered in various forms. Despite the availability of cloud based alternatives, established enterprises often don t have the ability to shift all their IT to the cloud at once. Therefore, some choose to have a mix of on-premises and cloud based solutions which creates a hybrid environment. So with an ever increasing array of business software alternatives; on-premises, hosting, cloud, SaaS, hybrid and so forth; it is not easy to navigate the maze of choices and make an informed decision regarding what service and deployment model is best for your business.
3 What s more, there is a clear shift in the way we work and communicate and our mental approach to business technology is changing thanks to new digital tools becoming more common place. Many companies understand that equipping employees with the latest technologies makes good business sense as in turn increases efficiency and productivity. So these factors also needs to be addressed during the decision making process. In this guide, we have attempted to demystify the on-premises vs. cloud dilemma by examining and clarifying the different variations to these approaches and looking at the various options they entail. We hope to be able to remove any cloud confusion and assist you in making an informed and accurate decision when changing your company s business solution. What is an on-premises solution? On-premises software is installed and run on computers on the premises of the person or organisation using the software. An on-premises model is what most businesses are used to as is the traditional approach. Your servers are located in your office, you purchase hardware and software licences and they are the property of your business. 100% ON PREMISE Office
4 On-premises alternatives On-premises solutions are available in various forms. One alternative is to outsource your hardware and thus use your software in a hosted solution. Originally called ASPs (Application Service Providers), these are installed on-premises solutions where the database is hosted by your vendor or a third party. Access to your on-premises software is offered via the Internet and your IT team plays a small role in ensuring the software is integrated within your environment. When there were no other alternatives, ASP was a reasonable way to access installed systems via the Internet. But once SaaS was introduced, it became obvious that SaaS (cloud based solutions) was a better option for most companies because SaaS solutions are designed and optimised for web browsers. They thus offer unique advantages over ASP in regards to support, performance, security, service levels, system integration and software viability. It is important to be aware that ASP and hosted vendors SaaS, and that ASP is not the same as SaaS. HARDWARE OUTSOURSING HOSTING Office Vendor/Hosting
5 What is cloud computing? Cloud computing is an umbrella term for a range of online computing services and is essentially the delivery of on-demand computing resources everything from applications to data centres over the Internet on a pay-for-use basis. There are three different cloud computing service models and these are Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). In this guide we will solely focus on SaaS because we are providing an overview of the application alternatives not the platform and infrastructure alternatives. Software in the cloud: Software as a Service (SaaS) Software as a service or cloud based applications, are provisioned on distant computers in the cloud that are owned and operated by a provider as a service to customers. The cloud based applications connect to user s computers via the Internet, usually via a web browser, allowing them to access their data anywhere and at any time. Visma offer various SaaS solutions, where the business solution is a web application easily accessible via any web browser. 100% ONLINE Web
6 The good and the bad of Software-as-a-Service Pros Cons Scalability so you can adapt the solution as your needs change. Not all cloud vendors can provide the required customisation. Easily accessible, anywhere, anytime, on any device. Reduced upfront costs on hardware and software, so lower total cost of ownership. Most cloud vendors have put a heavy investment in security and backup infrastructure. If one server fails, it is automatically picked up on another server. Always on the latest release and there are no big upgrade scenario. Rapid deployments as solutions are faster and easier to implement. The cloud vendor provides technical resources. Downtime - you are completely dependent on the Internet and your provider. If your Internet is down, your entire business is offline and unable to access the server. Rural Location - if your business is located in an area that has limited Internet access, you will not be able to use a cloud model. Cloud security varies depending on the vendor and is outside of your control. You are required to upgrade to the latest version of every release. Cloud vendor redundancy, if the vendor goes out of business you may no longer have access to the system or data. Online collaborative tools help improve business efficiency. You must keep vendor payments current, or you may lose access to the system. Utility based - most businesses only use 5-10% of their server resource, with a cloud solution you only pay for the amount of server resource your business needs and do so on a monthly basis, like electricity. It may be difficult to leave the vendor and migrate your data to a new system. Depending on the size of your business, there may not be a great price difference. The bigger the business, the less cost advantage. But this is dependent on the price model of the vendor.
7 The hybrid approach Since there are several PROS and CONS to cloud and on-premises models, many businesses have found a great compromise in a so called hybrid solution. A hybrid solution means that some of your resources are on-premises and some of your resources are in the cloud. It allows a highly customised approach, and lets a business use the cloud when it makes sense and avoid it when it doesn t make sense. This deployment model helps businesses to take advantage of secured cloud applications, and enjoy cost benefits through a controlled and gradual transition to the cloud. ONPREMISE COMBINED WITH ONLINE SERVICES HYBRID Web Synchronization/Integration Access Office
8 On-premises vs. SaaS: Making the choice SaaS On-Premises Cost Pay as you go, per user, per month, etc. Up-front investment for hardware, software licensing, server space, air conditioning, etc. Customisation Limited customisation in most situations (but this is changing). Somewhat customisable depending on the software vendor. Hardware Hardware and software owned and reside at provider site. Customer must provide hardware and system platforms to run applications. Security Access to SaaS applications is via Internet, which can create some security risks. Less risky because of secure on-premises location. Customer needs to take care of security and insurance. Mobile access Accessible via browsers running on mobile devices. Limited access to business applications via browsers running on mobile devices. Integration Integration possibilities depend on the vendor. This is an important requirement. Integration with existing software is commonplace. Control SaaS provider controls and maintains the service and is entrusted with customer data (need to have a clear security policy). Full control of own systems and data. Maintenance and updates Software updates are done by the cloud provider, so subscribers will always be up to date. Updating features may need to be repeated a number of times, depending on the architecture of the on-premises solution. Upgrades or feature enhancements can take months or even years and can involve additional costs.
9 Infrastructure required The hosted infrastructure required resides in the data centre of your service provider. Your IP connection to the cloud allows users to access that functionality. The cost for using the infrastructure is included in a monthly fee. The required infrastructure depends on the type of software and the database, the amount of users (desktops), preferred network and other related infrastructure issues. Installation costs Low installation costs because little/no hardware needs installing. High installation costs because hardware needs to be installed and staff/contractors need to be paid. Conclusion Technology today gives organisations a great deal of choice. While on-premises solutions have been around the longest, offer a traditional approach and in many cases also broad functionality. They also require a large upfront investment and strong cash flow management for ongoing costs; such as data security, climate control, maintenance, insurance, upgrades and so forth. Cloud based solutions, namely SaaS solutions, on the other hand provide a flexible and extremely accessible alternative where you can access real-time information where and when suits you. Since they are based on a pay-as-you-go pricing model, you benefit from reduced upfront costs on hardware and software along with scalability that lets you adapt the solution as your business needs change. What s more, most established cloud vendors, such as Visma, provide industry best practice and have put a heavy investment in security and backup infrastructure. The debate between traditional (on-premises) and cloud based solutions boils down to the specific details within each individual business. The decision to go with a cloud (100% online), on-premises (100% local) hybrid (combination), or hosted (outsource) solution should be made only after reviewing the unique needs of your business. The choice is yours! For more information regarding the transition to the cloud, refer to the below whitepaper. Is your business considering the cloud? Why it should be!
10 Sources Cloud computing professionals, 2014 Traditional v Cloud IBM Cloud, 2013 What is cloud? TechTarget, 2013 On premises vs. hosted cloud GFI whitepaper, 2013 On-premise vs. cloud based solutions NetworkWorld, 2013 Cloud computing, demystified Visma.net Security Guide, 2013 Cloud Security Concerns Unveiled Visma.net Whitepaper, 2013 Is your business considering the cloud? Kyriba, 2013 SaaS vs. ASP: Beware of the wolf in sheep s clothing Business & Technology Introduction to cloud computing, 2011
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