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SaaS software vs. on-premise solutions: pros and cons

Published: February 2, 2018

The rise of cloud-based solutions has completely changed the math when it comes to deployment of top-of-the-line HR solutions, allowing smaller companies to benefit from advanced functionalities just as much as their larger competitors. Still, many enterprises prefer to host their own software and retain full control over their data, even if it means they have to manage hardware and software elements of the system with in-house resources. This debate probably isn’t going to end anytime soon, so it may be the best to list the advantages and downsides of each architectural model in the context of human resource management and let each company come to its own conclusions:

SaaS solutions

Software-as-a-Service is a concept that is rapidly gaining mainstream recognition and is widely used in a number of industries. It relies on remote cloud servers for data storage and processing, liberating client-facing applications to be compatible with any device, even a mobile phone. Hence, the client doesn’t need any hardware purchases or software installations, and can simply utilize the solution as needed.

SaaS solutions come in many shapes and forms, but they are characterized by some common strengths and weaknesses regardless of the exact deployment model:

Strengths

  • Lower implementation costs, since cloud architecture eliminates the need for local infrastructure
  • No maintenance costs, since this is handled completely on the provider side
  • User-friendly interface minimizes training and facilitates more enthusiastic adoption
  • Ability to pay only for those services that were actually utilized

Weaknesses

  • Limited customization options, since the software wasn’t built specifically for any particular organization and may be too generalist for the current needs
  • The necessity of having an active broadband internet connection to access the solution
  • Vulnerability to server crashes or third-party errors

On-premise solutions

In contrast to cloud-based systems, on-premise solutions offer a greater sense of security and more complete control over proprietary data. Solutions of this type must be installed locally, so even if they feature wireless access they remain tied to a single geographic location. Access to software of this type is usually used based on licenses issued for a certain period, with every upgrade requiring additional agreement with the provider.

Here is an overview of the positive and negative features typical for this solution class:

Strengths

  • Full control of all modules and procedures, with the ability to reach quickly to any hardware problem or data loss
  • Improved data security, with the possibility to determine various clearance levels for different employees and physically restrict access to most sensitive information
  • Greater range of available customizations, or in some cases deployment of tailor-made solutions

Weaknesses

  • Large investment in infrastructure necessary before deployment
  • Ongoing expenses related to administration and maintenance of the system
  • Clients are locked into a single HR software product until their license expires, with additional payments for upgrades

The verdict

While it’s true that different organizations prioritize different benefits, in most cases SaaS solutions represent a more cost-effective option. With improved responsiveness and advanced encryption techniques becoming the standard, this group of HR solutions seems to have addressed the most glaring issues and can now compare to custom-built solutions in terms of functionality. In 2018, only companies that already own the necessary infrastructure have reasons to consider locally hosted solutions.

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