What is On-Premise Software?

On-Premises Software - Definition & Explanation

Introduction to On-Premise Software

Companies have a variety of options to deploy software solutions that are tailored to their particular requirements. A traditional and long-lasting model is software on-premise, also called on-prem. On-premise software is run on the computers that are located within the premises that belong to the business which is using it, not located via remote servers, or the cloud. This method has unique advantages and drawbacks that make it an ideal option for a variety of businesses and organizations, particularly those with particular needs for security, data control and personalization. Understanding the advantages and disadvantages of on-premise software is vital for companies to evaluate their IT plans and investments in infrastructure.

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On-Premise Software

What is On-Premise Software?

On-premise software, commonly known as on-prem is a kind of software deployment that requires the software program to be installed and run on the computers located on the premises of the company that are running the software, instead of located in a remote area like a cloud or server farm. This model of implementation of software was used across the world of business for many years and is utilized by many companies, specifically those with particular requirements for control of data and personalization.

Key Characteristics of On-Premise Software

On-premise software is distinguished by distinct features that set it apart from its deployment methods, especially cloud-based ones. These essential characteristics influence how software is maintained, managed and used within an organization. Knowing these aspects is vital for companies considering software on-premise since they directly affect the efficiency of operations security, security, the possibility of customization and the cost structure. In this article we will examine the key elements that define the software on-premise, and provide an extensive overview of what businesses are likely to encounter when choosing this traditional but robust deployment method.

  1. Deployment and Infrastructure: Software that is on-premise requires the company to own an IT infrastructure of its own comprising servers, storage along with networking and storage equipment. The software is installed on the company’s hardware, and is maintained and managed by the IT department of the business.

  2. Control and Security: One of the major advantages of using on-premise software is the degree of control it gives. Companies have total control over their information, security protocols, and their software environment. This is especially important in industries that deal with sensitive data, such as finance, healthcare, and government agencies in which compliance with strict rules for data protection is required.

  3. Customization: On-premise solutions usually offer a lot of personalization. The software can be customized by companies to suit their particular operational requirements and integrate it seamlessly into other internal processes and systems.

  4. Costs: The structure of software on-premise typically includes a substantial initial purchase of software and hardware licenses, which is followed by periodic maintenance and support fees. This is in contrast to cloud-based solutions that generally follow subscription-based pricing models with lower initial costs, but the annual or monthly fees are recurring.

  5. Performance and Reliability: Because on-premise software is run using local hardware, it will provide superior performance, particularly when it comes to applications that require speedy processing and low latency. Furthermore it is under that of a business and is not dependent on external factors such as connectivity to the internet and other third party providers of services.

Benefits of On-Premise Software

The choice of on-premise software provides many advantages that could be crucial for some companies. This type of deployment provides unbeatable control over security and data as well as a variety of customization options and dependable performance. Understanding these advantages will aid businesses in making informed decisions regarding whether the on-premise software is compatible with their business goals and compliance requirements.

Benefits of On-Premise Software
  1. Data Control:Businesses have complete control over their data, which could be crucial for security and compliance purposes.
  2. Customization: A high degree of customization that meets particular business needs.
  3. Performance: Possibility of superior performance and lower latency.
  4. Security: More secure security control because the systems and data are in the company’s environment.

Challenges of On-Premise Software

While on-premise software comes with many advantages, it has certain difficulties. This includes significant initial cost, ongoing maintenance obligations as well as scalability issues and the inaccessibility of the software. It is vital for businesses to decide if the on-premise software is a good choice for their requirements and resources.

  • High Initial Costs: A significant upfront investment in software and infrastructure.
  • Maintenance: Responsibility for on-going maintenance of updates, maintenance, and technical support rests with the IT department of the organization.
  • Scalability: The ability to scale up could be more complicated and expensive when compared to cloud-based solutions that require more infrastructure and hardware.
  • Accessibility: Remote accessibility is limited unless other accessibility solutions for remotes are put in place.
What is an example of an on-premises

What is an example of an on-premises?

One well-known example of on-premise software can be SAP ERP (Enterprise Resource Planning). The SAP ERP suite is designed to handle various business processes like finance manufacturing, human resources supply chain services, procurement and many more.

Key Features of SAP ERP as On-Premise Software

  • Data Control and Security: Because SAP ERP is installed on the servers of the company The company has complete oversight over their data and can ensure that it is in compliance with the most stringent security and legal requirements.

  • Customization: SAP ERP allows extensive modification to accommodate the individual processes and requirements of a business. Businesses can modify the workflows and modules to enhance their processes.

  • Integration: It is able to seamlessly integrate with other applications on-premise and older systems, creating an integrated IT environment that can support a variety of tasks in business.

  • Performance:  Running locally on Hardware, SAP ERP is able to offer excellent performance and reliability. This is crucial for companies that depend on a continuous, efficient operation.

SAP ERP exemplifies the robust capabilities of the on-premise software that provides organizations with the powerful tools to oversee their operations, while also having the control of the IT infrastructure.

What is the difference between on-premise and cloud?

In comparison to cloud-based software, on-prem apps cost more. Along with the expense of licenses and other fees, users must also buy hardware and engage IT support staff to run the software. Incorporating them to existing processes and systems could take some time. However, a majority of users choose this method because it’s safer than with cloud-based software.

In addition, as the software is installed and controlled within the limits of the network of the user, Security and IT personnel have access to it directly. This setup grants them direct control over the configuration, management and security.

On-Premises versus Cloud Software

Users are able to choose from a variety of needs and requirements, and consequently, can choose between cloud and on-premise software that is based on these. Here are some things that they should think about.

On-Premises Software




Lower long-term costs: Annual maintenance costs and one-time license fees are lower compared to paying recurring expenses associated with cloud software.

Requires substantial capital investment for hardware and infrastructure: On-premises software users must deal with ongoing costs related to space, server, and other equipment, along with power consumption.

Control and management

Full user control: An on-premises environment allows users complete control and management of assets. That is particularly useful for those who work in highly regulated industries where privacy is a top concern.

Requires dedicated tech support: Since users have full control and management of all assets, the organization needs a dedicated IT support team.


Allows implementation of own security policies and procedures: Industries that deal with highly sensitive information often prefer to use on-premises software because it gives them more control over security. It allows them to contain information within their walls.

Requires dedicated tech support: Again, an internal IT support team is needed so users can implement their self-devised security policies.

User access

No need for Internet connection: On-premises software can be accessed even without an Internet connection. That makes it useful for areas where there is no reliable Internet connection. Multiple users can also access the system simultaneously without affecting the speed.

Can’t be accessed while on the go: On-premises systems have to be accessed within the vicinity of the user’s office or field. Remote access may be complicated to set up.

Cloud Software




Requires no capital expense: Cloud software only requires users to pay for the infrastructure they use, which does not include maintenance costs.

Can be more expensive over time: When recurring subscription costs are accumulated, cloud systems can cost more than on-premises software.

Control and management

Can be delegated to the vendor: Vendors can perform software updates and backups, so users don’t need a dedicated in-house IT team.

Vendors have full control: Cloud computing users often deal with issues concerning responsibility. For example, there have been instances where users fail to access assets because their vendor has the encryption keys.


Most cloud software vendors have robust security: Several vendors have highly sophisticated security protocols.

User security is only as good as the vendor’s: Not all cloud providers offer excellent protection. Once hacked, all of the data in their infrastructure is at risk of theft or leakage.

User access

Remote access is possible: Users can access the system and their data anywhere as long as there is an Internet connection. That makes it convenient for users since they can do remote work.

Internet access is required: Users need an Internet connection to access all their assets. That could put users who don’t have a reliable Internet connection at a disadvantage. Speed can also suffer when multiple users access the cloud system simultaneously.

Choosing between cloud and on-premise software is contingent on the company’s specific requirements, resources and strategic objectives. On-premise software provides more control, customization and security, which makes it a perfect choice for industries with strict regulations and large companies. Cloud software offers flexibility, scaling, and lower initial costs that appeal to companies looking for agility and easy access. Examining the distinct advantages and disadvantages of each alternative helps companies make informed choices that are in line with their business priorities and long-term goals.

Use Cases for On-Premise Software

On-premise software is ideally suited for companies that have particular requirements for control, flexibility as well as security. Industries like finance, healthcare and government use on-premise software to satisfy the strict requirements of regulatory compliance and secure sensitive data. Furthermore, large companies as well as businesses that have complex custom workflows gain by the flexibility as well as speed of deployments on premises. The understanding of these usage scenarios reveals why software on-premise remains an important option for a lot of businesses.

On-premise software is ideally suited to:

  • Highly Regulated Industries: For example, healthcare, finance, or government, where control over data and compliance are essential.
  • Large Enterprises: As a result of the ability in place to oversee their IT infrastructure as well as the need for highly tailored solutions.
  • Sensitive Data Handling: Companies who handle sensitive data prefer to keep their data in their own environment.


On-premise software is still a crucial alternative for many companies despite the increasing popularity of cloud-based software. The decision between on-premise and cloud-based software is based on a variety of aspects, such as the particular requirements of the business as well as the budgetary constraints, regulatory requirements and long-term strategic objectives. Through understanding the distinct advantages and disadvantages of software on-premise, companies can make educated decisions that meet their security and operational needs.

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Frequently Asked Questions

“On-prem” is an informal abbreviation for “on-premise,” which refers to a type of software deployment in which the program is installed on the premises computers which is owned and operated by a company instead of being stored on cloud servers or remote servers. It means that the software and the data it contains are managed and managed by the company generally using the equipment of its infrastructure. “On-prem” is a term used to describe a system operated by a manager “on-prem” is commonly used in the realm of software to define the specific deployment method especially in casual conversations or discussions between IT experts and business customers.


An on-prem server, often abbreviated by the abbreviation “on-premise server,” is an on-prem server running and is installed in the premises of an enterprise, and not in remote locations or hosting in the cloud. On-prem servers usually serve to store and manage files, run software and provide services to network users such as print, file share emails, web hosting, and more.

Companies choose to use servers that are on-prem for various reasons, such as greater assurance of the safety and security of their information, compliance with laws, modification of server settings and the need for high-performance computing within your own network. The management of servers that are on-prem requires dedicated IT staff responsible for updates, maintenance and troubleshooting for the servers to be runs efficiently and ensuring data integrity.

The most significant distinction between on-premises software as well as Software as a Service (SaaS) is the method by which the software is installed and used:

On-Premises Software:

  • Locally operated and installed using the organization’s own hardware infrastructure.
  • The hardware requires an upfront investment licensing, software, and regular maintenance.
  • The organizations have complete control over security, data and personalization.
  • Most often, IT is managed and maintained by IT personnel of the organization.
  • Updates and updates are handled by the organization, and can necessitate manual action.

Software as a Service (SaaS):

  • Managed remotely and hosted by the software company, accessible through the internet.
  • It is a subscription-based model of pricing usually with annual or monthly fees.
  • The initial costs are minimal as the software and hardware maintenance is handled by the service provider.
  • Provides flexibility, scalability, and accessibility on any device that has an internet connection.
  • Upgrades and updates are automatically controlled by the service provider, making sure that users are able to access the most current updates and security patches.

On-premise software offers greater control and greater flexibility, SaaS offers convenience, scaling, and lower cost upfront. The decision between them is based on factors like security needs, budget, and customization requirements, and scalability concerns.


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