Three key criteria for choosing between SaaS and on-premise software
The right IT set up for an organisation will depend on what works best to improve its performance and future sustainability. This stems from an organisation’s purpose, operating model, functional needs, risk appetite and how it engages with customers.
One key decision is whether to host your software on premise or in the cloud, via a Software-as-a-Service (SaaS) provider. This is often falsely presented as a rivalry—where the ‘right’ option depends on the speaker's agenda.
In truth, the only agenda that really matters is yours. Leading software vendors, like ReadyTech, have the expertise and flexibility to match your requirements.
So, given that on-premise and SaaS solutions both have pros and cons, where should you focus your time and energy when weighing them up? Here’s three factors you should consider.
1. What drives your organisation’s competitive advantage?
Some sectors—like government bodies and justice agencies—don’t have clear competitors, yet even these organisations are under pressure to increase outputs, generate efficiencies, and enhance the customer experience.
Research published by the Harvard Business Review noted a change in competitive dynamics that has been occurring since an accelerated uptake of enterprise software in the mid-90s, finding that sectors that invest more in IT were more likely to dominate, and leave digital laggards in their wake.
Being able to reliably digitise and streamline your unique business processes through responsive, user-friendly software provides the kind of speed, accuracy and scalability that breeds success.
- For SaaS solutions, speed, and scalability are well-known benefits. Vendors leverage large public clouds to provide additional computing power as and when it’s needed. Flexibility within the design of the software—to align to your specific ways of working—is less assured, which is why modular, highly configurable solutions like those offered by ReadyTech can be preferable.
- For on-premise solutions, customisation of your solution is a key drawcard. Custom-built software is more likely to be hosted on premise for organisations equipped to manage the complexity of bespoke development projects. On-premise software can also scale with demand, but it necessitates adding more servers on-site, which comes with added costs and sometimes delays as servers are acquired and configured.
2. How do you best achieve modern and effective systems?
Modern and fit-for-purpose business systems are an overarching goal for leaders, regardless of where software is hosted and who manages it.
On-premise solutions place a greater onus on an organisation to invest in, and manage, system design and upkeep. That’s not inherently good or bad. However, the difficulty of doing so is why on-premise solutions have a reputation for becoming outdated and expensive burdens.
For example, a recent report from Aberdeen Group, highlights the trend of organisations opting for a hybrid cloud infrastructure with some workloads handled via on-premise servers for network resilience, combined with public cloud workflows. Aberdeen highlights: “To be successful with hybrid cloud, the on-premises half of the equation also needs to be modernised, innovative and ready for the challenges of today and tomorrow.”
Modernisation is a journey with many steps—and no clearly defined end point. How you bear the cost of year-to-year modernisation, server maintenance, and software development is central to your choice between on-premise and SaaS.
- For SaaS solutions, the value of your subscription includes security, maintenance and innovation delivered by the vendor, as well as cost savings from being able to run a leaner IT operating environment. This places more importance on which SaaS vendor you choose—because you will depend on them to make good decisions about investing in research and development (R&D) and hiring suitably skilled experts and support staff.
- For on-premise solutions, you have greater control over how the software evolves and is configured for your specific needs. This is counterbalanced by the costs of development, power usage overheads, hiring, developing, and maintaining a robust IT team, and potentially large and unexpected capital expenditures to replace server equipment, add functionality or address rapidly evolving security threats.
3. Which offers a sustainable, long-term solution?
Modern systems need constant attention to stay that way—an important third consideration is your ongoing capacity to maintain your software’s currency and value to the people who use it.
Community, customer and employee needs are changing more frequently. Can the pace of your business reform keep up? Consider the risk of system redundancy to ensure your applications continue to enable your operations and not become obsolete.
It’s important to be realistic about the strategic value of internally-managed IT to your organisation—are in-house digital capabilities embedded in planning documents and budgets? Are you confident in being able to compete for top tech talent in a tight labour market? Are you confident that the in-house IT resources are up-to-date with the most current digital developments and strategic pathways?
- For a SaaS solution, vendor lock-in might be a concern. But as long as you retain ownership and governance of all your data, you’re positioned to remain agile in how you operate. Switching SaaS vendors is typically less complex than replacing a legacy core system that’s been left to languish.
- For on-premise solutions, having direct oversight of server security, backups and accessibility can be of high importance if your organisation operates in areas susceptible to internet outages, and other physical risks. Organisations must ensure on-premise infrastructure isn’t neglected, plus ensure the software itself remains useful and usable.
The choice that matters the most.
What’s that? Your choice of software vendor.
ReadyTech has invested heavily in being able to provide the most comprehensive SaaS offerings across a range of industries including education, talent management, government, and justice.
But we’re more interested in helping our customers succeed than dictating their technology choices.
Innovative technology is our bread and butter, but supporting customers on their modernisation journey with unparalleled flexibility—whether it’s on-premise or in the cloud—has made us the best choice for organisations ready to make a meaningful change.
