Should you opt for Software as a Service (SaaS) or stick with traditional on-premise deployment?
You have to make those important choices when it comes to putting new software solutions into use as a business owner or IT manager.
This choice can significantly impact your company’s efficiency, costs, and ability to scale.
Making the wrong decision could lead to overspending, lack of flexibility, and wasted resources on maintenance and upgrades.
In fact, Sage mentions a recent Mint Jutras Enterprise Solution Study that revealed a striking statistic: 69% of companies that adopted SaaS were able to redeploy their IT staff more strategically.
This means that by choosing SaaS, you’re not just changing your software delivery model—you’re potentially unlocking new opportunities for your IT team to add more value to your organisation.
Instead of being bogged down by routine maintenance and updates, your IT professionals can focus on innovative projects that drive your business forward.
However, is it true that SaaS is the best way and the only way of deploying your software?
In this article, we’ll explore the key differences between SaaS and on-premise software, helping you make an informed decision based on factors such as cost, scalability, and flexibility.
So without further ado, let’s get to it!
How do SaaS and on-premise software differ?
To understand the differences between these two models, let’s first define each one and then explore their key distinctions.
SaaS, or Software as a Service, is a cloud-based software delivery model where applications are hosted and maintained by the service provider.
You access the software via a web browser, eliminating the need for local installation and maintenance. Popular examples of SaaS applications include Salesforce, Google Workspace, and Microsoft 365.
On the other hand, on-premise software is installed and run on your company’s own servers and computers.
Your organisation’s IT team is responsible for managing and maintaining the software, including updates, security, and backups. Examples of on-premise software include traditional enterprise resource planning (ERP) systems and customer relationship management (CRM) tools.
The key distinctions between these two models lie in their accessibility, maintenance requirements, and cost structures.
SaaS solutions are accessible from anywhere with an internet connection, while on-premise software is typically limited to your local network.
When it comes to maintenance, SaaS providers handle updates, security patches, and backups, whereas with on-premise solutions, your in-house IT staff manages these tasks.
In terms of upfront costs, SaaS typically involves lower initial investments, as you don’t need to purchase hardware or expensive licences upfront.
On-premise solutions often require significant upfront investments in infrastructure and software licences.
More in Nexalab’s blog: SaaS Identity Management Challenges, Benefits, and Top Software Options to Manage Your User Access
Which is better for your business: SaaS or on-premise?
It’s actually hard to just simply assume that SaaS is better or on-premise is better.
Because each company has unique needs and considerations that should be taken into account when making this decision.
Factors such as budget, scalability, security requirements, and IT expertise all play a role in determining which option is the best fit for a particular business.
So, rather than just making a bold statement saying one side is better, let’s dig through each of these considerations.
Company Size and Growth Plans
Your company size and growth plans play important factors when choosing between SaaS and on-premise solutions.
For small to medium-sized businesses or startups expecting rapid growth, SaaS solutions often prove more beneficial.
These cloud-based systems can quickly scale up or down based on your needs, allowing you to add or remove users, features, or storage capacity with ease.
For example, if you’re a startup that suddenly lands a big client and needs to double your team, a SaaS solution can accommodate this growth almost instantly.
On the other hand, if you’re a large, established enterprise with stable growth projections, an on-premise solution might be more suitable. These systems can be tailored to your specific long-term needs and can handle large, complex operations more efficiently in some cases.
IT Resources and Expertise
Your existing IT resources and in-house expertise significantly influence your choice between SaaS and on-premise solutions.
On-premise solutions require a dedicated IT team for installation, maintenance, upgrades, and troubleshooting.
If you already have a solid IT department with specialised skills, you might be well-equipped to handle an on-premise system. This approach gives you more control but also demands more responsibility.
On the flip side, SaaS solutions reduce your need for in-house technical expertise.
The provider handles most of the technical aspects, including security updates, performance optimisation, and feature upgrades. This can be particularly beneficial if you have limited IT resources or prefer to focus your tech talent on core business initiatives rather than system maintenance.
Data Security and Compliance
Your data security requirements and industry compliance standards are critical factors in this decision.
If you operate in a highly regulated industry such as healthcare (HIPAA compliance) or finance (SOX compliance), you might find that on-premise solutions offer more control over your sensitive data.
With on-premise systems, you have physical control over your servers and can implement specific security measures tailored to your compliance needs.
However, it’s important to note that many SaaS providers now offer robust security measures and compliance certifications.
For instance, some providers offer HIPAA-compliant or SOC 2-certified solutions. In many cases, these providers can afford to implement more advanced security measures than individual businesses due to economies of scale.
Customisation and Integration Needs
Your requirements for customisation and integration with other systems should heavily influence your decision.
On-premise software often offers more extensive customisation options.
If you have unique business processes that require highly specialised software features, an on-premise solution might be more suitable. You have full access to the system and can modify it as needed, although this often comes with higher development and maintenance costs.
SaaS solutions, while increasingly flexible, may have limitations in customisation.
However, they often come with a wide range of pre-built integrations with other popular business tools. If your needs align well with the out-of-the-box features and available integrations of a SaaS solution, it could be the more efficient choice.
Benefits of SaaS
SaaS offers several key benefits for your business:
- Scalability and flexibility: SaaS solutions can easily accommodate changes in your user numbers or business needs. Whether you’re expanding into new markets or adjusting to seasonal demands, SaaS platforms can quickly adapt to your requirements.
- Lower upfront costs: With SaaS, you avoid the need for significant hardware purchases or extensive infrastructure setup. This can be particularly beneficial for smaller businesses or those looking to conserve capital. Instead of a large initial investment, you typically pay a recurring subscription fee.
- Automatic updates and maintenance: SaaS providers handle all updates and maintenance, ensuring you always have access to the latest features and security patches. This not only saves your IT team time but also ensures you’re always using the most up-to-date version of the software.
- Accessibility: SaaS solutions are typically accessible from anywhere with an internet connection, facilitating remote work and improving collaboration across different locations.
Advantages of On-Premise Solutions
On-premise solutions have their own set of advantages:
- Full control over data and security: With on-premise software, you maintain complete control over your data and security measures. This can be crucial for businesses dealing with highly sensitive information or those in strictly regulated industries.
- Extensive customisation options: On-premise software often allows for deeper customization. You can tailor the system precisely to your business processes, potentially improving efficiency and productivity.
- Potential long-term cost-effectiveness: If you run a large enterprise with stable, long-term software needs, on-premise solutions may prove more cost-effective over time. While the initial investment is higher, you avoid ongoing subscription fees.
- Independence from internet connectivity: On-premise solutions can operate without an internet connection, which can be crucial for businesses in areas with unreliable internet or those that need guaranteed uptime.
Comparing costs: Is SaaS cheaper than on-premise?
To really understand how each option affects your company’s financial wallet, you need to look at both the costs to start and the costs to keep going.
With SaaS, you don’t pay much to start.
You mainly pay for setting it up and teaching your team how to use it. But with on-premise software, you need to spend a lot more at the beginning. You have to buy computers, pay for software licences, and set up all the tech stuff.
As you keep using the software, SaaS will charge you regular fees.
These are often based on how many people use it or how much you use it. For on-premise software, you’ll need to pay to keep it running smoothly, update it, and fix any problems.
You might also need to hire IT people to take care of it. Both options might have extra costs you didn’t expect, like more training, connecting it to other software, or making changes to fit your needs.
How much each option costs in the long run depends on a few things.
If your company is growing fast, SaaS might save you money because it’s easy to add more users. But if you’re a big company that doesn’t change much, on-premise software might be cheaper over time.
Your specific needs matter too. If you need to change the software a lot, follow strict rules, or connect it to many other tools, this can make one option more expensive than the other.
The risk of “SaaS sprawl”
As you use more SaaS tools, there’s a risk of what we call “SaaS sprawl.”
This means you end up with too many different SaaS tools that don’t work well together. It can get messy and hard to keep track of everything.
If you’re a bigger company using lots of SaaS tools, you might want to think about using a SaaS management platform. This is a special tool that helps you keep an eye on all your SaaS subscriptions in one place. It can help you:
- See all the SaaS tools your company is using.
- Understand how much you’re spending on each tool.
- Find out if you’re paying for tools that people aren’t really using.
- Make sure your SaaS tools are secure and following the rules.
A SaaS management platform can save you money and headaches by helping you control your SaaS use. It’s like having a manager for all your SaaS tools.
For example, Octobits by Nexalab is a SaaS management platform that can help you avoid SaaS sprawl. It gives you a clear picture of all your SaaS tools, making it easier to manage them and keep your costs under control.
What about hybrid software deployment models?
Hybrid software deployment models combine elements of both SaaS and on-premise solutions, offering you a middle ground if your business has complex needs.
This approach can be suitable if you’re gradually transitioning from on-premises to SaaS, allowing you to migrate certain functions to the cloud while maintaining critical systems on-premises.
A hybrid model is also beneficial if you need to maintain control over sensitive data while leveraging SaaS benefits.
You can keep sensitive data on-premises while using SaaS for less critical applications. This approach allows you to integrate best-of-breed SaaS solutions with your existing on-premise systems, taking advantage of innovative SaaS offerings without completely overhauling your IT infrastructure.
While hybrid models offer flexibility, they also bring unique challenges.
Data integration can be complex, requiring careful planning to ensure seamless data flow between your on-premise and cloud-based systems.
Security is another concern, as maintaining consistent security policies across both environments requires thorough planning and execution.
Providing a unified user experience across different deployment models can also be challenging for your team and users.
To overcome these challenges, it’s very important for you to develop a clear strategy for data integration and security.
Investing in a powerful identity and access management strategy is key. Equally important is prioritising user experience when selecting and implementing hybrid solutions.
Remember, the goal of a hybrid model is to give you the best of both worlds.
It allows you to keep sensitive operations under your direct control while still benefiting from the scalability and innovation of SaaS. With careful planning and implementation, a hybrid model can provide the perfect balance for your business needs.
More in Nexalab’s blog: How SaaS Plays a Key Role in a Modern Company’s Operations
Conclusion
As we’ve explored, both SaaS and on-premise software deployment models have their strengths and weaknesses. The right choice for your business depends on various factors, including your company’s size, growth plans, IT resources, and specific requirements.
However, if you opt to use SaaS for your business, there is a risk of SaaS sprawl.
Octobits by Nexalab will help you with that. This powerful SaaS Management Platform (SMP) streamlines the process of integrating, monitoring, and optimising multiple software solutions, regardless of your chosen deployment model. With Octobits, you can enjoy the benefits of centralised management, automated reporting, and enhanced cybersecurity across your entire software ecosystem.
Contact Nexalab today to learn how Octobits can transform your IT operations.
