On-Premise or On-Demand: Which Solution is the Right One for Your Business?
Interview with Milan Havlicek and Jiri Psota
Picture this: You’ve made the business-critical decision to stop using antiquated Excel and spreadsheet tools to perform price management. Instead, you have decided to move to a new pricing tool that truly optimizes your daily pricing activities. Apart from which new vendor you want to work with and thousands of other details that are important to your business success, you also have one other key consideration in mind: Should we own the software or use a pay-as-you-go model?
In this brief interview with Yieldigo Co-Founder Jiri Psota and Sales Director Milan Havlicek, we’ll introduce the main benefits of both models to help you make the best decision for your retail business.
Core Differences Between On-Premise and On-Demand Solutions
Jiri, what is the primary 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 (in-house) solution is typically suitable only for large clients who want to place data on their own servers and have a sufficiently powerful infrastructure. More often than not, they have an internal IT team that can take care of running applications and security. The solution is owned by the customer, therefore all of the maintenance work and costs of the software are fully the responsibility of the end-user. The customer in this case has total ownership of the software, for better or for worse. This also means that updating the software and expanding its capabilities is only possible with a very expensive IT team behind it.
Alternatively, an on-demand (cloud-hosted) solution offers end-users software or hardware that they don’t own, but that they run their data on, instead. In this case you only pay for using the product and do not have to deal with the complications of maintenance, and features are implemented and improved upon by the creators of the product. There is no need to place large investment up front in case of the cloud solution, and the monthly fee will cover a complete set of services on a per user or per service basis. In this case, the company does not need the internal IT resources to handle the maintenance and upgrades.
Simply put, the main advantage of the on-demand solution is lower operation and implementation costs, with the added advantage of constant upgrades to the newest version, and the most stable and reliable security possible. The advantage of the on-premise solution is true ownership of the product, which by default also comes with hefty additional costs and a significant amount of in-house maintenance work, and likely no external assistance unless it is included in the terms of service.
Important Considerations When Making Your Decision
Milan, according to your experience, how does the client decide what is important to consider when thinking of a new solution, be it in-house or SaaS?
Nowadays, every client has very different internal conditions, IT environment and infrastructure, IT team capabilities, and internal knowledge, as well as its own history.
The main questions they tend to consider before moving to cloud solutions remains similar, regardless. Typically, the client should ask about where the data is stored due to different legal requirements in different countries, along with what security measures must be in place, and what differing SLA conditions exist.
Back to you Jiri: Although there are customers deciding for on-premise, is there a possibility later on to switch from on-premise to a cloud solution, from a technical point of view?
Yes, 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 a particular solution’s usage. The on-premise solution represents a large initial investment into your own hardware and implementation. The question in this case will be more about deciding whether the lifetime of the solution is being reached, or if the investment into the upgrade is reaching a higher or similar cost to simply using a 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 common practice. It’s relatively easy and usually takes only a few days. Typically it only requires the end-user to prepare the data and transfer their settings with consistency, performing thorough checks along the way so it will be ready to run correctly.
Milan, what would be the trigger or the right business case to think about it?
As Jiri mentioned earlier, the on-demand solution does not need any large up front investments. The monthly fee will cover IT capabilities and resources, therefore the company can benefit from an assisted implementation process (depending on the vendor) and start using it very quickly when compared to the on-premise solution.
What are the positives of the cloud solution and how soon can companies get up-and-running with it, Milan?
I would like to mention three main areas that simplify the whole start of the project: First, the vendor is responsible for SLA and accessibility, which is quite helpful for the end-user; second, they benefit from a fast implementation time; and last but certainly not least, they will incur a much much lower cost. I would also mention that later on, while using the software, the running costs are lower and more efficient in the cloud.
The Yieldigo Solution
Jiri, is Yieldigo’s software 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. As such, the end-user will receive the highest level of security and the latest version updates of our product that can will periodically upgraded to support user needs consistently throughout the lifecycle of the software. Yieldigo listens to its end-users and implements features based on their specific business needs.
In Yieldigo, we can also provide partial support for an on-premise solution. This includes application upgrades, user assistance, or troubleshooting of the application, mainly. However, the client has to manage the hardware purchase or maintenance, security, and monitoring of the application.
Milan finds that the nicest aspect of the cloud solution is that it is a service that you pay for, and as such, it can be taken care of and maintained by the company offering the product. If you see that the software does not fit your needs, or if you are unsatisfied with the service, you can always just move away from it and implement a different solution with no strings attached, similarly to if you decided to change your phone service operator.
Jiri, could you please tell us what it means for customers to go with an on-premise solution from Yieldigo, for example?
The main difference is the implementation costs. We know that the costs will go up at least five times higher in the case of on-premise solutions. Though we do offer on-premise solutions to businesses upon their request, we always inform them of the higher costs that they will incur if they choose to not go with our on-demand solution. This happens due to the specific customizations we are able to perform for their business, precisely because any given software version has to be created and managed for a single, specific client. Henceforth, the solution has to be purely based on its environment (and takes much more work in order to achieve) and tailored to their exact needs. In addition to the hardware requirements, the costs can run relatively high overall when choosing to go with an on-premise implementation.
Thank you Jiri and Milan for helping our readers clarify any doubts they may have on this topic! We hope that this interview will help you with your solution implementation considerations.
If you would like to learn more about how Yieldigo works, feel free to check out our product page, and don’t hesitate to get in touch with us if you would like to talk to our pricing expert.