On-premise or on-demand: How to decide which solution is the right one?
Interview with Milan Havlicek and Jiri Psota
Lets now imagine that you’ve made the important decision to move away from the old type of calculations in excel, and hiring a new pricing tool to optimize your daily activities. Now besides thinking about the new vendor and thousands of other details, you may consider to think of one key question, whether to go for ownership of the software or rather pay as you go model.
In this article, we’ll focus on introducing the main benefits of each way to help you with the right decision making. Thanks to Jiri Psota and Milan Havlicek for answering my questions.
Jiri, let’s take it from the ground: what is actually the main difference between a company hosting everything in-house and a cloud-hosted solution provided by a third party?
Jiri Psota, co-founder of Yieldigo
The on-premise or in-house solution is usually suitable for large clients who want to place data on their own servers and have a sufficiently powerful infrastructure and an internal IT team that can take care of running applications and security. The solution is owned by the customer and all the maintenance jobs and costs of the software falls under the customers plannings. The customer in this case has the total ownership of the software with all what it takes.
Explaining on-demand solutions basics is that the customer does not own the software or the hardware that the software runs on. In this case you only pay for using the product. There is no need to place large investment up front in case of the cloud solution, the monthly fee will cover a complete set of services per user or per service. At the same time the company does not need the internal IT resources to handle the maintenance and upgrades.
Simply said, the main advantage of the cloud solutions are lower operating and implementation costs, constant upgrades to the newest version and the security that is stably at the highest level.
Milan, how does the client decide, what is important to consider when thinking of a new solution in-house or saas?
Each client has nowadays very different internal conditions, history, IT environment and infrastructure, capacity of IT team and internal knowledge.
The main questions before moving to cloud solutions remain similar. Typically the client should ask about where the data is stored due to different legal requirements by different countries, what are the security measures and what are the SLA conditions.
Although there are customers deciding for on-premise, Jiri, is there a possibility later on to switch from the on-premise to the cloud solution from the technical point of view?
Technically it is possible. Usually it is easy to switch from on-demand to on-premise when the customer knows exactly what to implement and has experience with the usage. The on-premise solution represents a high initial investment in your own hardware and implementation. The question in this case will be more on deciding whether the lifetime of the solution is being reached or the investment into the upgrade is reaching a higher or similar cost as hiring the saas solution.
On the other hand, switching from an on-premise solution to the cloud makes sense for long-term cost savings, although it is not too common practice. It’s relatively easy and usually takes only a few days. It’s basically only required to prepare the data and settings transfer with consistency checks and it can be ready to run.
Milan, what would be the trigger or the right business case to think about it?
As Jiri mentioned previously, the on-demand solution does not need any large up-front investments. The monthly fee will cover IT capabilities and resources and so the company can hire an implementation and start using it pretty quickly in comparison with the on-premise solution.
What are the positives of the cloud solution and how soon can companies start running with it, Milan?
I like to mention three main areas that simplify the whole start of the project. The vendor is responsible for SLA and accessibility, high speed of the implementation and lower cost. I would also mention that later on, while using the software, the running cost is lower and more efficient in the cloud.
Jiri, is Yieldigo tool able to support both types of solutions?
In the case of a cloud solution, Yieldigo provides complete support for the entire service in Microsoft Azure. With that, the company will receive the highest level of security and always the latest version of our product that can be periodically upgraded.
In Yieldigo, we can also provide partial support for on-premise solution. It includes mainly application upgrades, user assistance or troubleshooting of the application. The client has to manage the hardware purchase or maintenance, security and monitoring of the application.
Milan sees the nicest thing about the cloud solution that it is a service that you pay for and as such, it can be treated. If you see that the software does not fit your needs or you are not satisfied with the service, you can always back off from it, same as if you decide to change your phone service operator.
Jiri, could you please bring in, what does it mean for customers to decide on taking on-premise solutions from Yieldigo?
The main difference is the implementation costs. We know that the costs get up at least five times higher in the case of on-premise solutions. This is happening due to the specific customizations, because a specific version has to be created and managed for a single client and it has to be purely based on its environment. With addition to the hardware requirements, the costs can run relatively high.
Thank you Jiri and Milan for a nice conversation and looking forward to the next topics.
Jiří Psota is co-founder of Yieldigo, dedicating his time to the leading of the development of the platform. Before he successfully co-founded and exited several companies. The first significant challenge was to architect a software and setup development processes for one of the biggest CEE e-commerce players Mall Group. During the early stages of his career, he co-founded Mobile Internet (currently part of Dentsu Aegis Network) which is now among successful mobile development studios. Jiri graduated from Software Architecture at CTU shaped his future career path in technology. He was already working for Seznam.cz and IBM on R&D projects while studying.
Milan Havlíček joined Yieldigo more than three years ago, before he led the revenue and pricing teams for corporate brands such as Makro Cash & Carry, Syngenta or Pilsner Urquell. His vast pricing knowledge from global projects in Europe, APAC and North America regions, brings to Yieldigo expertise on how retailers build up their strategies and what is important for them. Milan graduated from VŠE in Prague, enjoys playing tennis, soccer, skiing and cycling.
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