What does On-Premises mean?

The term on-premises (abbreviation: on-prem) describes the installation of software on one’s own local devices. This field was introduced when cloud computing became increasingly popular and a term was therefore needed for the hitherto normal procedure of installing and running programs locally.

What does On-Premises mean?

When companies or organizations work on-premises, they mean that they maintain their IT infrastructure, as well as the software applications they use, completely independently and in-house. This means, for example, that they have purchased a company license for an enterprise resource planning tool (ERP tool for short) and installed it on their own devices.

In order for their employees to access it, a certain amount of computing power is also required. To this end, the company has provided local servers on which the data is stored and which in turn provide the power so that queries can be calculated. In the event of failures, the responsible employees in the IT department must rectify the problem as quickly as possible so that the system is operational again.

What is a Cloud?

Only a few years ago, when computers were not yet so widespread, it was quite normal for several users to be created on one computer. In it, the various people in a household stored their files or installed programs. Although all the pictures from the different users were physically stored on one computer, without the password of the others, the users only had access to their own pictures. Thus, if a father did not know his daughter’s password, he could not view her user’s pictures even though they were on the same computer.

User access to the central infrastructure | Source: Author

The principle of cloud computing works in a similar way, at least in the storage area. Here, many different users use one or more devices that they can access via the Internet. Although their data may be on a computer, they can only view their own information, since information about users is protected.

On-Premise vs. Cloud

Since on-premises and cloud are two very contrasting concepts, it is worth taking a closer look at the advantages and disadvantages of one system over the other. The advantages of on-premises are in most cases also the disadvantages of on-premises and vice versa.

In recent years, data protection has become increasingly important. With on-premises applications, internal data does not leave the company’s internal networks. This ensures that no outsider can access sensitive data unless they gain unauthorized access to the network. In a cloud environment, however, some sensitive data leaves the company and there is no control over what happens to it. Although agreements can be made with cloud providers about data processing, there is still an increased risk.

In addition, on-premises applications make you less dependent on Internet failures or network problems. By providing software or data locally, it is possible to work without the Internet. This is not the case with cloud applications.

However, on-premises applications provide the opportunity to achieve a high degree of personalization. Cloud providers often offer only a limited scope of services, which is sufficient for the majority of customers. Nevertheless, this may not be sufficient for some companies, which is why on-premises software offers the possibility to personalize the application for the capabilities needed.

When it comes to the cost factor, the cloud is ahead in many respects. On the one hand, cost-intensive servers and their infrastructure do not have to be purchased, and on the other hand, they do not have to be maintained by personnel. This means that high fixed costs for procurement and variable costs for maintenance can be avoided. Another cost factor is the establishment of backups, which in the case of the cloud is the responsibility of the provider. At the same time, contractual penalties can also be agreed upon, which become due in the event of a system failure over a certain period of time. Thus, the risk of the application can be almost completely outsourced.

Which applications use on-premises?

On-premise computing refers to the deployment of hardware and software in an organization’s own facilities rather than in a cloud-based or remote environment. Here are some of the use cases where on-premises computing is preferred:

Security: Organizations working with sensitive data may choose on-premise computing because it provides better control over security measures and reduces the risk of data breaches.
Regulatory compliance: Companies that must comply with government regulations may need to keep their data on-premise to meet certain regulations.
Cost-effectiveness: In some cases, on-premise computing can be more cost-effective than cloud-based alternatives, especially for long-term use.
Adaptability: Organizations with specific IT infrastructure needs may prefer on-premise solutions that can be customized to meet their needs.
Existing systems: Companies with existing legacy systems may find it difficult to migrate to the cloud, and they may continue to use on-premise solutions until they can replace them with modern alternatives.

Despite these benefits, on-premise computing also has its limitations and drawbacks. Some of these include:

Limited scalability: These solutions are difficult to scale as business needs change, which can limit their flexibility.
Maintenance and upgrades: On-premise computing solutions require regular maintenance and upgrades, which can be costly and time-consuming.
Resource-intensive: Such on-premise applications require the use of internal IT resources, which can put a strain on staff time and budgets.
Disaster recovery: Local computing solutions are vulnerable to natural disasters or other disruptions that can lead to data loss or downtime.
Lack of innovation: These solutions may lack the innovation and new features that cloud-based alternatives offer, as they are often slower to adopt new technologies.

Ultimately, the decision to use on-premise computing depends on a company’s specific needs and circumstances. While it offers more control and security, it can also be more resource intensive and less flexible than cloud-computing.

What future developments might there be?

On-premise solutions have been around for a long time and remain popular in many industries. However, as technology advances and cloud solutions become more prevalent, the role of on-premise solutions could change. Here are some future trends for on-premise solutions:

Hybrid solutions: As more organizations move to a hybrid cloud strategy, on-premise solutions will continue to play a role in managing critical data and applications that need to remain local. A hybrid solution enables the benefits of both worlds to be leveraged, providing flexibility and scalability.
Edge computing: With the advent of the Internet of Things (IoT), the need for computing power at the edge of the network, where data is generated, is increasing. These solutions can be used for edge computing to process data locally, reducing latency and improving efficiency.
Improved security: Security concerns remain a major factor in the adoption of cloud solutions. Local solutions offer more control over data security and regulatory compliance, making them an attractive option for organizations with stringent security requirements.
Modernization: Many companies still rely on legacy systems and applications that run on local devices. As these systems age, they need to be modernized and upgraded to remain competitive. This could lead to renewed interest in on-premise solutions.
Cost optimization: On-premise solutions can be expensive to maintain and upgrade. However, with the advent of containerization and virtualization technologies, these solutions can be optimized for cost and efficiency. This could lead to renewed interest in on-premise solutions as a cost-effective option.

Overall, while the trend toward cloud solutions continues, on-premise solutions will remain an important part of the IT landscape. Enterprises need to balance the benefits of local solutions, such as security and control, with the benefits of cloud solutions, such as scalability and flexibility, to create a hybrid solution that meets their specific needs.

This is what you should take with you

On-premises is a newly created term introduced with the rise of cloud applications.
It describes systems that provide the necessary infrastructure and installation of software completely locally and thus dispense with the use of cloud systems.
The advantage of such architectures is above all the high level of data protection and the ability to individualize them for their own use case.