Cutting through the hype about
cloud vs. on-premise software
Over the past year or so, there has been a lot of noise and hype in the marketplace surrounding
SaaS (software as a service) or cloud-based software.
At TCM, we are soon going to launch our hybrid software to give our clients the option of choosing
what data they prefer to remain on premise and which information can be shared on the cloud.
As such, we feel that we can provide a neutral analysis of the pros and cons of each type of
software to help our clients and prospective customers cut through the clutter and make an informed
decision based on fact not hype.
Information Management (an online technology magazine) recently ran an article by Justin Kern, in
which Kern asked a number of researchers to review their Business Intelligence predictions for 2013
after six months into the year. Principal analyst at Nucleus Research, Hyoun Park, had made a bold
prediction that business intelligence adoption would “explode as 2013 unfolded”, due to rapid
adoption of cloud-based software.
Mid-point through the year, Park acknowledges that only certain sectors of BI are growing quickly,
and that the vendors which provide full analytics functionality are still focused on selling “traditional
on-premise infrastructure”, because “they are not following the easy money”.
So, not everyone is buying cloud-based BI software and on-premise software is still very much in
demand and available.
Loss of data, unauthorised access and misconfiguration are frequently raised as concerns
surrounding cloud-based software. Some analysts have also pointed out that large cloud vendors
could present a more visible target to hackers. However, data security is a concern for any business,
and due diligence is essential. Many businesses are opting for partial cloud solutions, while retaining
their most sensitive data on-premise.
Data stored in the cloud is easily accessed. This means that security concerns need to be
adequately addressed with respect to the type information stored off-premise, and the levels of
authorisation and access to that data.
On-premise data is also easily accessed, and appropriate security measures should also be
Scalability is always a major concern for growing companies. While many cloud software products
are scalable, many on-premise solutions are also highly scalable. Many on-premise providers will
also provide a solution developer/consultant to ensure you have the optimal solution for your
Cost and total cost of ownership
Software costing can be very complex, and it’s particularly important to compare “apples to apples”.
While initial proposals may look enticingly competitive, be sure that ALL the costs have been
included. Have training and customer support been included in the offering? If so, how will this be
provided? Are you paying a flat rate for the number of user licenses, and how much will additional
licenses cost? How does a monthly or annual subscription compare to the total cost of ownership of
a one-off purchase? How does the cost compare when you consider that you can write down the
initial cost of the software? Ultimately, any software solution you select must meet your current and
future needs. So although the data visualisation of one product is appealing, if another product
offers you the analytics functionality you need, you’ll need to be clear which is going to meet your
needs and provide the best return on investment.
Cloud software is not often easy to truly integrate with other legacy and on-premise systems. Core
databases are stored on software vendor servers, creating an extra barrier to integration with
desktop tools and software.
Many on-premise solutions are very easy to integrate, with the added benefit of support from the
Service and training
Many cloud-based software companies have received low marks from their customers for their
responsiveness to client concerns and problem-shooting. While this could be true of any company,
it’s important to select a solution provider who can legitimately claim to provide superb customer
service and is willing to provide client references and testimonials.
If you’ve selected a cloud-based vendor, it’s important to ensure that you can extract your data
quickly in a format suitable for migrating to another platform if your vendor is acquired, goes out of
business or you want to switch to another solution.
With an on-premise solution, data is either stored on premise or in a data centre. However, you’ve
got the software to access your data at any time. Again, it’s important to ensure that your terms and
condition provide you with a level of access and assurance that meets your needs.
If your internet service is not available, mission critical information is lost to your team, until service
is restored. Obviously, this is an important factor if you are considering a cloud-based solution.
Consider the potential effect and cost to your company if deadlines are missed, downtime is
incurred, or overtime is required.
Many companies find themselves poorly prepared to cope with a disaster. This is a problem,
regardless of whether your data is stored on-premise or in the cloud. However, there is potential for
added complications if you have to deal with a third party provider.
Ease of implementation and flexibility
Cloud software implementation rollout is potentially easier than on-premise, because of its simple
subscribe and login through a web interface. However, on-premise systems may provide more
options in terms of how the system is accessed and deployed throughout the company.
Jurisdictional and legal considerations
Recent developments in the news have underscored the need for diligence in protecting data,
particularly when it involves mission critical information or data compiled from individuals. This is
true, whether you are operating an on-premise or cloud solution. However, because of differences in
international law governing data, cloud-based solutions may be at greater risk of being subjected to
foreign agency requests for information. Varying local laws governing financial regulations may also
determine where financial records are held, and this could be an additional consideration if you
select a cloud-based solution.
Data-driven decision-making helps to improve your efficiency, competitiveness and productivity.
However, it’s important to be sure that you have the right solution for you and that you know that you
can rely on it.