What’s the Difference Between SaaS and On Premises?

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What’s the difference between SaaS and On-Premises?

On premises and software as a service (SaaS) are two ways that your organization can deploy and use software required for business operations. 

In the on-premises model, your organization acquires and installs the software on on-premises data centers. Your organization’s internal IT deployment manages all the infrastructure required to use your software securely and at scale. For example, you would purchase and maintain server hardware. You’d also configure and update the operating systems that your software runs on, and you’d install and upgrade any required add-ons and plugins. 

In contrast, SaaS is a cloud-based software model that delivers applications to end users through an internet browser. SaaS vendors host services and applications for your organization to access on demand. With a SaaS offering, you don’t have to think about how the service is maintained or how the underlying infrastructure is managed. You only need to think about how you will use the software.

Implementation differences: SaaS Vs. on-premises

 

On-premises solutions require complex implementation and infrastructure management, while software as a service (SaaS) doesn’t. We discuss other implementation differences next.

Cost

 

When you use an on-premises solution, you have to manage the entire process across setup, implementation, and maintenance. For instance, you may have to purchase your own IT infrastructure and employ IT staff to upkeep your systems and troubleshoot errors. Additionally, if you want to upgrade your hardware down the line, that cost is your responsibility. Further to this, the time it takes to procure these resources and set them up inflates costs even further. This means on-premises solutions are typically costlier to install and maintain.

In contrast, when you use SaaS software, you pay a third party to use their IT infrastructure. It’s often a subscription-based service, so you pay for the resources you use based on different bands. Due to the lack of need to buy infrastructure, SaaS is cheaper for businesses to get started with. 

Customization

 

With on-premises solutions, you’re in charge of your infrastructure and the software you rely on. Due to that flexibility, you have a higher degree of customization. You can integrate internal systems, request custom features to match your requirements, or build hardware capabilities into your machines. However, the flexibility does come with associated costs.

SaaS software provides a different form of flexibility. While you cannot physically change the IT infrastructure offered to you, you can change the subscription package you use. Considering the advanced complexity of modern SaaS solutions, you can find the configuration options you need for most use cases. The extent of customization depends on the vendor you partner with, but it’s typically still high. You can sign up with a SaaS service provider and start using it that very day. 

Ongoing support

 

All ongoing support in on-premises systems is your responsibility. If you need to troubleshoot errors, fix bugs, manage infrastructure, and update software, then you need to hire an IT team. Your IT team will be able to provide the ongoing support you need. However, hiring personnel also includes staff training, salary, and development costs.

In contrast, SaaS providers offer technical support. It’s their responsibility to maintain systems and ensure everything is regularly updated. You can directly contact support as needed.

Security

 

You have complete control over the security measures you use in an on-premises solution. You can customize your IT configurations to include whatever cybersecurity you like. While this offers flexibility, it also means that you need to regularly update and monitor your security systems.

Conversely, SaaS providers have customers around the globe, which means they bear a critical need to keep business and customer data safe. They typically invest extensively in security solutions. Most SaaS providers have a dedicated security team that monitors and minimizes security incidents. As always, the level of security depends on the provider, so you should only work with reputable companies.

Backup

 

On-premises solutions can back up at any frequency you like. You can directly configure your backup schedules and policies. With this control, you can customize your backup technique and select the data strategies. However, as it’s your responsibility, your team must ensure you have backups in external locations in case of hardware failures, location disasters, or unforeseen circumstances. 

SaaS solutions often include automated disaster recovery and backup systems as part of their packages. Each provider regularly performs backups to keep customer data safe. Due to the scale of most reputable providers, they have extensive disaster recovery and mitigation plans, which helps ensure you have great protection. Understand your provider’s backup framework and system before committing to their services. 

Other key differences: SaaS vs. on-premises deployments

 

Beyond the fundamentals of software as a service (SaaS) and on-premises deployments, various other distinctions set these solutions apart.

Scalability

 

On-premises systems are scalable, but this scalability comes with a direct cost. If you want to improve your system, then you have to upgrade your hardware. 

When a business experiences a spike in traffic, you can’t instantly scale to accommodate. You must pay technological costs upfront and wait for additional servers to arrive. Alternatively, you may overprovision resources in advance, and have them underused until required. While you can access scalability, it requires a considerable time and cost investment.

SaaS infrastructure is incredibly scalable, as you simply change your subscription to suit your needs. Instead of buying new hardware and waiting, you select a new plan and instantly gain access to more resources. SaaS scalability is seamless and rapid, so you can easily accommodate traffic spikes. 

Accessibility

 

You have to manage the network connections required for your employees to access the on-premises software. Depending on your network infrastructure, you may have to deploy multiple instances of the on-premises software in different data centers for global access. All instances may require maintenance and upgrades for a consistent experience.

In contrast, accessibility is a key feature of SaaS environments. SaaS providers create their solutions to be as accessible and flexible as possible. Any team member in any location can access resources through either dedicated applications or your web browser.

Analytics

 

On-premises solutions contain the analytical tools and software you integrate into them. While this gives you flexibility, you’re also limited to the separate tools you invest in. Moreover, you may have to hire data engineers and analysts to build bespoke systems, reports, and dashboards. 

In contrast, your SaaS solution typically offers direct integrations with analytics platforms and reporting tools. Vendors often have analytical suites that they include in your subscription package or provide for an additional cost. 

You can customize your plan depending on what analytics systems you are looking for. However, you may not be able to directly customize the tools you use.

Why did SaaS solutions replace on-premises deployments?

 

An on-premises solution was considered the standard business approach for many years. However, software as a service (SaaS) solutions have steadily become more popular for several reasons.

The SaaS model is highly accessible and convenient for businesses. It provides you with these benefits: 

  • A cost-effective approach with flexible SaaS pricing models
  • The ability to scale up or down with minimal cost and time investments
  • Ongoing support and maintenance
  • Security and data protection under appropriate regulations

Cloud computing technology constantly advances, and vendors regularly update their infrastructure to give customers the best possible service. Contracts govern the vendor-customer relationship for quality assurance.

SaaS vendor contracts

 

SaaS providers offer service level agreements (SLAs) that provide legal and contractual rights to customers. Each SLA clearly defines the main terms and conditions of using the associated SaaS product. These conditions include information about uptime, expectations around security, the degree of live support a customer has, and obligations to update software.

SLAs also define who owns the data that the vendor stores. The SLA details how the customer retains all data rights and can retrieve and remove it from the vendor servers at any time. It also explains what happens to data backups, where vendors store them, and other service delivery details.

Read about SLAs »

SaaS flexibility

 

Modern SaaS solutions offer greater flexibility and control to customers to help them achieve their business goals. For instance, you can choose SaaS products that connect to data sources you control—either in your cloud account or on premises.

You can also choose SaaS offerings that augment your existing on-premises or cloud applications. SaaS customers can select the best options that meet their needs of security, control, and customization.

Summary of differences: SaaS vs. on-premises

 
 

SaaS

On premises

Cost

Known and fixed. A SaaS provider details specific subscription bands and what it includes in each one. You select the one that matches your needs.

Unknown and changeable. High upfront and maintenance costs.

Customization

SaaS is only as customizable as the provider allows.

Extremely customizable, as you can create and deploy new features.

Ongoing support

Provides continual support as defined by your SLA.

You provide all maintenance, recovery services, and regulatory compliance.

Security

Provided by vendor and regulated by SLAs.

Data security and data protection depends on the security systems you employ.

Backup

Data backup systems are a core part of SaaS vendor offerings. Gain potentially unlimited data storage capacity based on pricing.

You are responsible for backups. You must be prepared for a technological disaster and other potential problems.

Scalability

Flexible and very scalable. It offers instant scaling.

Slow to scale as you have to buy and install new infrastructure, but can expand alongside a growing business.

Accessibility

By anyone with an internet connection and authorization from the SaaS vendor or customer admin. 

Only accessible to on-premises users or through virtualization networks. 

Analytics

Integrate with other analytics platforms if your provider allows.

The digital systems you connect are up to you, but you will need to install them and cover analytics application maintenance.

How can AWS help with your SaaS requirements?

 

AWS offers many platforms to build custom software as a service (SaaS) applications and third-party SaaS solutions. You can access several tools and resources to drive your SaaS transformation. Build your organizational, operational, and technical capabilities with AWS best practices and SaaS expertise. For more information, go to SaaS on AWS.

 AWS SaaS offerings can help you achieve the following:

  • 30-50% reduced development time for a minimum viable product
  • 70% increase in gross profit margins
  • 69-77% reduced time to launch in new markets
  • 41% increase in operating margins

Get started with SaaS on AWS with Cloud Wizard Click here.

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