April 1, 2021

The two most popular deployment options in today's integrated workplace management systems (IWMS) are Software-as-a-Service (SaaS) and On-Premises (On-Prem). In the process of learning and narrowing down the right IWMS solution, you as the decision maker, or being a part of the procurement team, may come to a fork in the road when asked, "Would you prefer SaaS or On-Prem"? You may be asking yourself, what are these acronyms and terms? What is the difference between the two? Before identifying which deployment method is right for your small to medium or enterprise sized company, making sure you have considered all of its factors is an important step. Seven factors to consider are installation and customization, data accessibility and data storage, support and maintenance, scalability, pricing, security, and recovery and back up. But first, let's define these two terms: SaaS and On-Prem.

What is SaaS?

Software-as-a-Service, frequently identified as SaaS or software "in the cloud", is when data and information is hosted and stored in the cloud by a third party service provider. Users are able to access this data and information as long as their devices are connected to the internet.

An everyday example of a company that uses SaaS is Netflix. Netflix is a software company that stores several licensed movies and tv shows for users to watch on demand [4]. Once a user purchases their subscription package and logs into the application, as long as the user's device is connected to the internet, they are able to access the content and use Netflix's streaming services.

What is On-Prem?

On-Premises, frequently identified as On-Prem, is data and information that is hosted and stored in hardware servers that are situated in-house or on-site. The hardware that is purchased is then solely owned and maintained by the company. Users are able to access data and information through the company's network and on company grounds where the hardware servers are hosted.

Building on the everyday example of Netflix, purchasing On-Prem is like purchasing a DVD player & DVD collection. Once purchased, the DVD player and collection is owned by, and stored inside the owner's home. The owner can only use and enjoy it within their home and is responsible for any maintenance and repair needed on the hardware.

SaaS vs. On-Prem: 7 Key Factors to Compare and Consider

Now knowing the main difference between SaaS and On-Prem; one with data hosted in the cloud and the other in in-house hardware servers, there are also several factors to consider to help identify the right solution for you. Let's highlight seven key factors and use these to compare and identify these differences.

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1. Installation & Customization

SaaS

Purchase of subscription, and users are ready to use the system within minutes
No need for a dedicated IT department to install and test as the SaaS providers manage the system on their end
No customization as software and user experience is common to all users

On-Prem

Requires the company's IT department to install the hardware servers, and on-site real estate to store the hardware
Customizations are easier to implement into management systems as company owns and has full control over the hardware

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2. Data Accessibility & Data Storage

SaaS

Users can access company data through a login on any device as long as they are connected to the internet
Ideal for companies who have several remote workers that require the flexibility to work anywhere
Data is hosted and stored in the cloud by a third party service provider

On-Prem

Users can access company data only through company private networks and on company grounds
Restricts and or makes it difficult for users to have access remotely
Data is hosted and stored within the company’s hardware servers located on-site

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3. Support & Maintenance

SaaS

SaaS provider is responsible to ensure continual support and maintenance of software and hardware that is provided to prevent and or fix technical issues when they arise
Relieves IT department in dealing with software and hardware system issues and will not require additional IT resources to manage

On-Prem

Responsibility and reliance is on company's IT department to troubleshoot and fix any technical issues on the hardware servers when technical issues arise
IT department may need to consult a third party support and maintenance company to help with issues that are out of their expertise

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4. Pricing

SaaS

Subscription-based with payments made on a monthly or annual basis
Various tiered pricing models
Costs can add up in the long term

On-Prem

One time purchase of hardware servers and the software license fee
May end up paying for hardware that is unused during a specific season or time
Consider additional costs for ongoing maintenance, upgrades and the need for more IT resources as your company grows

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5. Scalability

SaaS

As your team grows or decreases, it is flexible, scaling up or down as you only pay for the number of services or users that are needed
Add-ons and upgrades can be implemented within minutes once you have purchased it through the SaaS provider

On-Prem

Growth in the company would potentially require additional purchases of hardware servers, real estate to store hardware, and hiring of more IT resources
Add-ons and upgrades will be an expensive process from configuration to go-live as the IT department will need to configure and test

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6. Security

SaaS

Responsibility is on the SaaS provider to ensure data of clients are protected and secure from external threats
Continual research and upgrades to the security system are performed by the SaaS providers allowing clients to focus on their day to day work
SaaS providers focus on delivering innovative cloud technology and building stronger systems to quickly detect and catch any potential threats before their clients' data are affected by it

On-Prem

Responsibility is on the company's IT department to setup security, private networks and or firewalls to ensure data and information is protected from any external threats
Programs installed for security will need ongoing updates as external threats are constantly emerging and would need to ensure programs are able to detect potential new threats
Reliance on the IT department may require investment in additional IT resources and updated programs to prevent security threats or breaches

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7. Recovery & Back Up

SaaS

Requires purchase of recovery and backup add-on unless the services are included in the subscription package
Company relies on the SaaS providers for data to be quickly recovered with cloud backup

On-Prem

Responsibility is on the company's IT department to ensure that data can be recovered and backed up
Duplicating data as backup may be the most effective but requires investment in additional hardware, increased network bandwidth, and real estate

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SaaS or On-Prem: Finding the Best Fit for your Company

In comparing SaaS vs. On-Prem, there are several factors that help identify the pros and cons in both options. SaaS undoubtedly provides efficiency and flexibility that allows for workers to work seamlessly when there is company growth, a future scope for service expansion, and the need for accessibility to work remotely. A study done during the pandemic by Verdantix, a research and advisory firm on digital strategies, has noted that "about 20% more customers considered cloud deployments important compared to 'on-premises' deployments" [7]. The escalation in remote work and the need to adapt quickly for business continuity became top priority for some businesses who, as Verdantix stated were, "seeking software cloud deployments for digital agility and resilience as well as for the ability to configure, provision and design the solution they need, when and where they need it" [7].

Working from the cloud may be the current trend, but on the flip side, some businesses' top priority may be data protection where company data is hosted in on-site hardware and managed by company personnel. The ownership of data and assets may be a deal breaker, where in this instance OnPrem would be the better option.

Ultimately, when asked "Would you prefer SaaS or OnPrem," having considered all factors and keeping your company's priorities in mind, you as the decision maker or being on the procurement team can make an informed decision on a deployment method that is the best fit for your company's IWMS solution.

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