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On-Premise, Hosting and Saas, What Does It Mean for Your Technology? (Part 1 of 3)

Kim Anselmo - Thursday, February 20, 2014

by Kim Anselmo, The Resource Group

We all know the difference between owning, leasing and renting when it comes to our office space, a warehouse, or a retail store. We know the difference between owning, leasing, and renting a car. But do we know the difference between owning, leasing and renting our technology?

So how do we make a decision about this own, lease or rent dilemma? First, it helps to understand the differences not only from a technology perspective but also from an investment and financial perspective. In this three-part blog series, we will review the differences between on-premise, hosting and SaaS. Hopefully this will make it all a little easier to understand as well as qualify and quantify as it pertains to your business’ technology choices.

On-Premise = Own
On-premise technology has the same meaning as owning your computer hardware and software. You own the equipment (hardware) and you own (or license from the publisher) your software. Most of the software we have used in the past is on premise and owned by us. We are responsible for maintaining it, for fixing it when it breaks, for making sure it is meeting our needs and for keeping it up and running. Some organizations have internal IT departments to handle all of this and others use outside companies to help them. And, in many cases there are multiple helpers (people or organizations) either internal or external.

On-premise systems give the user the greatest control and flexibility, just like owning your own office building. You don’t have to check with anyone if you want to make modifications; you have control of your data and can manage it any way you wish; you can build your systems to your own specifications that meet the specific needs of your organization. A copy of the software runs on your computer equipment for your use and is not shared with anyone outside of your organization. You have complete control of who accesses your systems, your software and your data. Just like owning your own office building, you can move walls, build new rooms, add special electrical or plumbing systems to meet specific business needs and you can build on additions and expand as you need.

And, just like buying an office building, you pay for your software once (or finance it) and you pay for the on-going maintenance and upkeep. The initial costs are high and typically require a long-term, capital investment – just like buying a building.

On-premise technology may be best suited for companies that prefer to keep their technology in house, and have a support team to maintain and ensure the technology is up-to-date and running smoothly. 

Part 2 of this blog will discuss the benefits and challenges of hosting your financial software solution.

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