Industrial Software: SaaS versus On-Premise

To support their operational excellence activities companies often rely on software, like business intelligence (BI) software, industrial data platforms or process analytics solutions. To implement and use this software over its lifecycle, end users can choose between two options. The first one is a local or on-premises installation, the second is to use the software through a public cloud, often offered as Software as a Service (SaaS).Historically, on-premises solutions prevailed. 

Let’s take a look at advantages and disadvantages of on-premises solutions versus Software as a Service (SaaS) in the cloud from the industrial organization’s perspective. Both concepts have certain advantages and disadvantages, and these must be considered for each individual case. 

On-premises solutions offer several advantages: 
•    Customization, tailored to specific industry requirements and operational needs
•    Full control over data, security rules, and system performance. 
•    Compliance is easier, as keeping data on-site ensures no third party is involved.
•    Integration with existing on-premises hardware and legacy systems is seamless.

However, there are also disadvantages: 
•    High initial costs for hardware, software, and implementation. 
•    Maintenance can be expensive, particularly when maintaining specific developments to customize the software. 
•    Scalability requires additional hardware investments and can be time consuming. 
•    Updates and patches must be applied manually, which can lead to downtime and require IT resources. 
•    Specific developments can complicate the update process to ensure compatibility with new software versions. 
•    Flexibility is limited in terms of remote access and mobility.

SaaS Software in the cloud offers other benefits: 
•    Cost effective, with lower upfront costs due to subscription-based pricing and a reduced need for in-house IT resources. 
•    SaaS also benefits from infrastructure mutualization, leading to lower hosting costs.
•    Scalability, as it is easy to scale up or down based on needs without significant investments in hardware, thanks to cloud technologies. 
•    Automatic updates and patches ensure that the latest features and security measures are always in place.
•    Customization is mostly achieved through configuration, allowing for seamless updates without the need for custom developments.
•    Accessibility, as SaaS can be accessed from anywhere with an internet connection, enhancing flexibility and remote work capabilities.

But there are some downsides to think about when using SaaS: 
•    Less customization compared to on-premises solutions, as tailored developments are rarely possible. 
•    Control over data and security protocols is also reduced, as there is a dependence on the service provider for availability, confidentiality, and security. 
•    Compliance to regulatory requirements can be challenging as data is stored off-site and third parties need to be integrated into the process. 
•    SaaS is reliant on stable internet connections for access, and downtime or slow connections can impact operations.

The decision between on-premises and SaaS depends on the industrial organization's specific requirements, financial constraints, regulatory environment, and scaling objectives. For organizations requiring extensive customization and control, on-premises may be more appropriate. For those seeking cost-effective, scalable, and adaptable solutions, SaaS in the cloud could be a more suitable option. The SaaS in the cloud approach provides more No-Code/Low-Code configuration (LCNC) capabilities than on-premises solutions. Complex applications may still need traditional methods. A balanced approach might combines LCNC for simple tasks and custom development for complex ones.