“On premises” also referred to as “on-premise,” “on-premises,” or “on-prem,” is a method of deploying software. With on-prem, the computer programs are installed right on the user’s computer through CDs or USB drives. Whereas with off-premise, the installer can be anywhere on the Web.

Many companies opt for on-prem because it doesn’t require third-party access, gives owners physical control over the server hardware and software, and does not require them to pay month after month for access.

Think of how you buy your fast food meal. You could buy it and eat it “on premise” at the fast food restaurant. Or you can call and order your meal, and have it delivered to your home.

Other interesting terms…

Read More about “On Premises”

On-premises software is located and operated within a user’s data center. As such, it uses the user’s computing hardware rather than that of a cloud provider. Also known as “shrinkwrap,” on-premises programs are among the most commonly used enterprise and consumer applications that require licenses per server or computer. Vendors are no longer responsible for their security and overall management but do provide after-sales technical support.

On-Premises versus Cloud Software: Key Differences

Compared with cloud software, on-premises applications are much more expensive. Apart from spending on licenses, users also need to purchase hardware and hire IT support personnel to maintain them. Integrating them into existing systems and processes may also take time. But a lot of users prefer this because it is more secure compared with cloud software.

Additionally, since the software is installed and operated within the confines of the user’s network, security and IT personnel can directly access it. This setup gives them direct control over its configuration, management, and security.

Pros and Cons of On-Premises versus Cloud Software

Users have varying requirements and resources, and so can choose between on-premises and cloud software based on these. Here are some factors they can consider.

Pros and Cons of 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 this 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.

Pros and Cons of 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.

Security 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 are 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.

Hybrid Solutions

While cloud computing and on-premises software use are often considered competitors, vendors believe that the two can work together. And so they offer the best of both worlds through hybrid solutions.

Hybrid solutions use both on-premises and cloud software. The on-premises software makes up a so-called “private cloud” that resides within the confines of the user’s network. The less-sensitive applications are, meanwhile, hosted in the public cloud, so they don’t take up physical resources.