On-Premise vs. Cloud: Which to choose?

• Posted on 21 July 2022
• 0

The choice between working locally or in the cloud is part of the license planning for many companies and single users nowadays. The two license types can be useful depending on the customer’s requirements and the work model. In order to make the most beneficial choice, in the following blog, you can read more about the specifications of the two license types and their advantages and disadvantages.

On-Premise vs. Cloud: Overview

What are On-Premise Licenses?

One characteristic trait of on-premise licenses is that you can install them and work locally, let’s say on a server or a computer. This way you are in control of the license set-up. Additionally, you are the only person who has access to your data and information as they remain on your network. When it comes to buying on-premise licenses, the only payment you need to do is at the moment of purchase. Afterwards, you can technically use the license for an unlimited period of time.
Examples of Cloud-based licenses are Microsoft 365 and some antivirus software. All Retail and Volume licenses from Microsoft are in the category On-Premise licenses.

What are Cloud-based Licenses?

With Could-based licenses, all your IT is connected through an internet connection. This means that any database or network you use and create is uploaded to the cloud. This eliminated the worries about enough storage on your local computer or server. Moreover, you do not have to acquire additional infrastructure. Different from the on-premise software, cloud-based licenses require monthly or yearly payments.

On-Premise vs. Cloud: advantages and disadvantages

On-Premise is the best fit because:

• You can use the software long term
• Despite the higher one-time costs, it is often cheaper than cloud-based licenses
• You can store and access your data locally
• It provides a higher level of privacy and security
  
  

Cloud licenses are the best fit when:

• You prefer or mostly work in the cloud and not locally
• You do not mind part of your security being compromised
• You need or want to access data anywhere and anytime
• You prefer a subscription-based purchasing model - paying monthly or yearly
  
  

Below you can find a graph that illustrates the long-term price comparison between On-Premise and Cloud based licenses. The graph assumes a one-time purchase of an On-Premise license with a value of 130€. The Cloud-based licence was estimated at the price of 15€ monthly. 

Summary

On-Premise and Cloud-based licenses serve different purposes and are a good fit in different situations. If you prefer a one-time payment at the moment of purchase instead of paying every month or year to be able to use the license, then On-Premise is the right choice for you. On the other hand, if you have a strong preference or desire to work in the cloud instead of locally, then you might want to take Cloud-based licenses into account. Another important aspect to consider is the price. As the graph above illustrates, after 8-9 months subscription-based licenses are already more expensive than on-premise ones.