Part 1of 3: SaaS vs. On-Premise: How to choose your web application?

1 August 2017
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On-demand or on-premise? Advantages and disadvantages:

The service offers of on-demand, SaaS, and cloud are steadily rising. A study conducted by Markess International, has shown that collaborative solutions and business communications are widely adopted as software as a service (SaaS), as opposed to on premise project management software. Companies use applications to share online calendars, organize remote conferences, manage contacts, sort documents or provide enterprise messaging. However, even though this model is widely used on a global level, it still remains in competition with on-premise solutions, and assessing the advantages and disadvantages of this deployment model is essential when choosing professional software.

Cloud computing continues to grow. According to market analysis from IDC, global acquisitions for cloud-based solutions, should be on the rise from $70 billion in 2015, to $141 billion in 2019. According to analysts, the sector has experienced an annual growth rate of 19%, which is six times higher than that of the global computer market. The giants of cloud like Amazon, Google, and Microsoft, continue to expand their cloud service offerings, taking with them ISVs and render services based in the cloud faster, cheaper and more effectively.

According the IDC, SaaS technology (Software as a Service), is the driver of cloud computing. More than half of the revenue on these services (55%) is generated in the United States, according to a recent study conducted by Transparency Market Research. This rate of growth is expected to continue until 2022. Many solutions for business are actually developed in the United States and are offered only in the cloud. Among the most popular software, we find Salesforce or Workday for business solutions, and Slack, Evernote or Trello for collaboration tools, used by millions of users.

On-demand: less commitment and investment

On-demand software, unlike conventional licenses, is leased and hosted in the cloud by the vendors. The company doesn’t need to provide a server and it saves on resources. The software is hosted in the cloud, and is accessible from anywhere. A modern browser with an internet connection is the only requirement. No installations are required, and the software is quickly ready for use. Moreover, the cost-effectiveness and transparency are seen as major benefits of SaaS.

No investment is required (hardware, system, middleware or other application) and staff don’t need to take care of system maintenance. There are no additional costs to the monthly or annual subscription fees.

SaaS solutions also bring benefits in the field of security. Specialized providers offer deals that work on professional data centers and are highly secure. The safety standards of these data centers are generally much higher than the servers of the companies themselves, especially for small and medium enterprises. Backups and updates are the responsibility of the cloud provider. Companies can focus on their core business and the IT department avoids complex and demanding tasks for maintenance and activities that do not bring real value to the business.

Advantages of On-demand installation

  • No investment in hardware or server needed
  • Quick and easy implementation
  • IT infrastructure is not required
  • Automatic backups and regular updates 
  • Greater security in cloud data centers and specialized vendors
  • Opportunity to focus on the core business

SaaS, the majority of acquisitions

France is also largely affected by cloud computing. Today, SaaS accounts for 12% of the software publishing market. The French market has been steadily rising since 2014 and shows a revenue increase of 20% in 2015. France remains a smaller market, compared to its European neighbours, but it still accounts for 1.3 billion Euros.

In France as in the rest of the world, SaaS service providers remain leaders and represent 60% of the market. The CAP research firm says that in 2015, SaaS was used by nearly 80% of organizations. As in most European countries, security remains an argument against this deployment model. It appears that many companies do not yet feel ready to implement a SaaS application. A survey conducted by the CRIP Association (in France, 05/2015) shows that 53% of businesses are not yet ready, and 26% would agree with certain conditions in place. It also appears that 12% say they have already deployed this model and 5% are ready to deploy an on-demand application.

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