Finance Speak – Cloud based or On-Premise?
(Finance Speak is a new series where we will discuss typical questions & concerns expressed by our customers. We will delve into the logic and analysis behind each discussion. If you’d like to contribute or ask a question, send a message to firstname.lastname@example.org with ‘Finance Speak’ in the subject line.)
Gorilla – Would you like for us to host the application & data or do you want to manage it yourselves?
Executive (Anonymous) – I think we will be going with an On-Premise package because it will be cheaper
G – Do you have a server? Do you have internal experts who can tackle this? Do you plan to host other applications?
E – We don’t really have an IT team or other applications but it shouldn’t be too tricky I imagine
G – Well, firstly you will need IT experts to deploy and manage the application. Secondly, you are handling important data, which will be accessed periodically, so you need to be sure about security, encryption, retrieval etc. Plus you don’t want the system to go down when people are traveling around the clock and using the application
E – In that case, we will let you manage it. But won’t that be more expensive for us?
G – Not really, considering all factors. Let me break it down in more detail………
We get this question every time, 99.9% of the time actually. Most of our customers evaluate On-Premise (OP) vs Cloud (CL) based solely on price which can be misleading. When you go with a CL based solution you get several things – flexibility, scalability, transparency, maintenance, On-Demand expertise etc.
And when it comes to price comparisons, CL can be cheaper than OP in some cases. Most companies don’t consider the TCO of an OP solution and therefore assume CL will be more expensive. Of course in some cases CL may be more expensive. But there are more facets to that discussion than a simple OP costs-divide-by-12-months and compare to a CL monthly rate. In some companies, there may be corporate mandates to use OP for all applications and that makes sense because price is not the sole reason.
For a more in depth analysis, see this article from CIO.com that captures the salient points very well –