Cloud Versus On-Premises: Seven Considerations for choosing Procurement Software
Like any major technology purchase, selecting the right procurement software requires a great deal of thought and exploration. But once you’ve narrowed down the features you need — from purchasing requirements, to RFP functionality to vendor evaluation — you should then consider how you want to deploy your procurement software: in the cloud versus on-premises.
Before making a decision, here are seven things to keep in mind:
1. Financial Viability
On-premises solutions require significant upfront capital, whereas a cloud-based solution requires an ongoing monthly subscription. Payment preferences will depend on the enterprise, but a monthly subscription base reduces upfront costs and increases flexibility to switch vendors if the software performance fails to meet expectations.
Also important to note: On-premises installation requires ongoing investment, according to author and entrepreneur Zak Mustapha. This includes in the infrastructure and IT resources necessary to maintain and support the procurement software throughout its lifespan. Once these additional costs are tallied, the bill for an on-premises solution may net a higher total cost of ownership than a cloud-based solution.
2. Integration Complexity
IT teams must also consider how complex the procurement software will be to integrate with other systems and applications. A cloud-based solution can help accelerate integration, while an on-premises deployment may require significant integration investment both in time and money.
Although cloud providers are expected to invest more into their offering’s security, a third-party product isn’t inherently more secure than a cloud you’d host on-premises. Enterprises make similar investments in general software security with respect to apps and related platforms they use on-site. The difference is how they may include cloud in that security umbrella. Nonetheless, it’s worth noting that an enterprise must take a broader view of their security portfolio when determining where cloud fits into the budget — a choice cloud providers don’t necessarily have to make to protect their software.
4. Performance and Scalability
One of the key benefits of a cloud-based environment is the ability to scale quickly and easily to maintain high levels of performance. On-premises systems aren’t equipped to dynamically adapt to demand, and will require additional IT resources and infrastructure investments to meet that demand. On the other hand, the cloud model is built on a dynamic framework that can scale up or down based on need. This helps enterprises meet demand spikes and save on the costly investment of infrastructure and processing power.
With many executives and employees working on the road, from home and just about anywhere outside of the office (and on any device), you want to ensure the solution you select allows for anywhere and anytime access. While enabling an on-premises system to deliver this access is achievable, it will require additional investment to do so. Cloud-based software, however, is designed for ultimate accessibility and requires no additional effort from IT to provide it from anywhere on any device.
6. Software Releases and Maintenance
On-premises deployments require ongoing support and maintenance from IT as new software releases need implementing. In addition, upgrades may pose issues with software customizations implemented at the time of deployment, requiring IT to maintain each customization or to ignore updates and continue operating on outdated software. Alternatively, all upgrades and maintenance to a cloud-based procurement software are made in the cloud, guaranteeing the most up-to-date version is always available.
7. Time to Deployment
According to an IDG survey, 46 percent of enterprises with more than 1,000 employees and 37 percent of enterprises with fewer than 1,000 employees cited speed of deployment as a key business goal for investing in a cloud solution. Cloud providers have dedicated cloud operations teams, which help reduce the overall implementation time and allow enterprises to realize their return on investment sooner than on-premises deployments.
Cloud Versus On-Premises
While a cloud-based procurement software is well suited for most enterprise environments, there are numerous factors to consider when selecting a deployment method.