On-premise software, often called “On Prem,” is software that is hosted on an organization’s own servers and infrastructure, rather than in the cloud.
This means that the business is responsible for installing, maintaining, and securing the software within its own physical environment. Unlike cloud-based solutions, where hosting and maintenance are managed by a third-party provider, on-premise software is typically purchased as a one-time license, and the organization has direct control over its hosting and data security.
On-premise software is particularly common in industries like finance, healthcare, and government, where data sensitivity and control over systems are critical. Many companies choose on-prem solutions for increased security and control over data, particularly if they operate in highly regulated industries or have specific compliance requirements.
On-premise Software vs SaaS
On-premise software is often compared to Software as a Service (SaaS), a cloud-based alternative where the software is hosted off-site and accessed through the internet. While SaaS provides the benefit of remote access and reduced IT overhead, on-premise software offers more control and customization options since the company manages its own servers and resources.
However, with on-prem solutions, companies are responsible for all aspects of maintenance, from software updates to hardware upkeep, which can increase costs and require a dedicated IT team.
For instance, a company using an on-premise customer relationship management (CRM) application must handle data storage, server maintenance, and software updates independently. In contrast, a SaaS CRM solution offers these capabilities through a web-based interface, often with automatic updates and support included, but it does not provide the same level of control as on-prem.
Advantages of On-premise Software
One key advantage of on-premise software is the level of control it provides. With on-prem solutions, organizations can customize and configure applications to fit their unique processes and compliance requirements. This level of control is especially valuable when companies need specific hosting or security settings that cloud providers may not support.
Additionally, on-premise software may provide greater long-term cost benefits in some cases.
While SaaS solutions require monthly or annual subscription fees, on-premise software is typically a one-time purchase, potentially reducing ongoing expenses for companies that have the resources to manage it in-house.
Businesses with strict data protection requirements also benefit from the security that comes with hosting software on their own servers, which limits exposure to external threats.
