min read

Cloud vs On Premise | benefits and risks

Evaluate Cloud Based Solution and On Premise Software, match with your business needs, check which one suits your situation.

On Premise Software

For a long time On Premise software have been serving all kinds of businesses in the world. Basically an on premise software is one that is installed locally on the business’s server, it can usually be accessed without internet connection. But it is limited by location and it can only work on the computers where it is supported and installed. These are custom software that need to be developed and come with high upfront costs. It is not maintained or optimized after development but provides a level of reliable and secure control over the functionalities it offers.

Cloud Software

Cloud software have started becoming talk of the town because of the flexibility it offers. The software or service is hosted on the internet in service providers hosting and it can be easily accessed via web browsers. It requires an active internet connection to work properly. You only pay for the resources that you use so the upfront costs are lower. And you can always change your payment plan if you need more features and services. The time to deployment is also instant because you can use the software immediately after payment. This is a great solution for small and medium sized businesses which may not yet have the need or resources for a fully customized On Premise software.

Main Differences

Below we discuss the main differences in detail to develop a better understanding of how these types of software are different from one another and which better suits your business needs and goals.

Deployment method and Business mobility

On premise software are custom developed with your business requirements in mind and then deployed on your business’s server and it is installed in the connected computers. The computers are able to communicate with each other without need for internet connection. Usually staff is required which sets up the system and trains your employee to use the software. These software may have special requirements for computers so it can be installed and run properly.

If your business moves to a new location, you are required to reconfigure the software with new server details. This can be a tedious task and you may have to hire a professional to complete the relocation and setup for the software configurations.

Cloud software solutions save a lot of time and money with deployment. These are one size fits all kind of solutions so you have to choose one that best fits your business goals and needs. After a low upfront payment, you can immediately start using the software. It is hosted on the internet and accessible by your web browser.

No relocation process is required because you can use any device anytime and anywhere with an active internet connection and your business process and data is not affected at all.


When anything is custom designed it costs higher than the usual solution. Same is the case with software. With on premise software you can get a custom software developed which fulfils all your business needs and processes just the way you want. But this solution is provided with a high upfront cost and can take some time in development so you will have to plan your deployment time and capital.

On the other hand, Cloud solutions are hosted on the web. These are premade to fit business use cases and are offered with low subscription prices. If you find a good matching solution for your business needs and process then this is a great option. Otherwise if you wish to get benefits of cloud software with custom solution then it can cost higher than on premise software development.

Control and Security

The business is the owner of On Premise software which it develops therefore it has complete control over business processes managed in the software because it is custom designed for the business needs and use. The business retains all the data and its rights. The business can set own policy for usage of its On Premise software. This means the business will also have to attain licenses and permissions if any is required. Business will also have to follow data conformity rules and standards.

In case of Cloud based solutions, the solution provider is the owner and it’s their responsibility to handle licenses and permissions if any. They will also have a set of terms and policies that you have to accept in order to start using the service. The data privacy and ownership standard depends on terms and policies of the service provider.

In terms of usage security both Cloud and On Premise software have user management features and tools for better handling employee authorizations and limiting access to confidential data.

Which one is better?

Small to medium businesses prefer Cloud based services because of the flexibility it offers. You can easily switch plans if you wish to upgrade your resources. The startup costs are lower and deployment is also quick and easy. Some business still prefer On Premise software over these benefits. Therefore the answer really depends on what your business needs are and which solution is able to better help you achieve your goals. For this reason we have compiled brief comparison list highlighting the main differences so you can easily find out which solution’s benefits meet your business goals.

Benefits of Cloud based software services


Cloud based services have low upfront costs which make them affordable solution for businesses in startup phase or with less resources. It is also extremely useful for businesses where the service objectives meet business goals and use case.


These services are hosted on the web which means you can access this service from any device which can run a web browser and at any location where you have active internet connection. This allows for amazing accessibility and easy to relocate your business without any hassles.


These software are maintained and optimized by the service provider so you don’t have to worry about system bugs. You can expect latest features to be added with time and also have 24/7 support staff ready to help you.


Cloud services are flexible and offer easy scalability. If you need to use more resources you can upgrade your pricing plan or choose a solution pack built for you. Most Cloud based software offer at least 3 plans to meet all types of business’s needs.

Low cost

No need to purchase and setup expensive servers, no extra payments for hosting, backup, training, maintenance and service support.


Cloud services take security measures and have licenses and permissions where required. They also follow industry standards and rules for data conformity.

Disadvantage of cloud

Internet Availability

Cloud services require internet connection to work properly. You cannot access hosted service if you don’t have an active internet connection or your internet is down for some reason.


Cloud service providers are the owners and they have set their own terms and policies which you have to accept if you wish to use their service.

Custom solution

Cloud services are based on use cases and may not exactly fit each of your business goals and processes. If you require any custom features you will have to contact the development team and request the feature or have a custom solution developed for you.

On premise advantage


With On Premise software you are the owner of the developed solution therefore you have complete control over data, hardware, system and any configurations or upgrades that you wish to do.

Own Server

Since the solution is hosted on your own server, there are no external factors which can hinder your system availability and performance such as internet.

On premise disadvantage

Upfront cost

There is a large upfront cost associated with custom designed On Premise solution. More costs are added with support and other everyday costs such as electricity, server maintenance and others.


There are costs associated with maintenance of your business server to ensure smooth working. In order to upgrade and maintain the software solution, you will have to assign a development team and go through an upgrade cycle with added costs.

Deployment time

Development of custom solution takes times so your deployment and capital costs will have to take that into account with your business plan. If you wish to launch your business quick then maybe Cloud service is a better option.


SMIELS is a cloud based service that provides easy and efficient business process management related to sales and purchase invoicing, warehouse operations, inventory and reporting. Check out more features here. Learn more about how SMIELS has helped customers cut running costs and increase their revenue.