SaaS or On-Premise: Which is better for Startup?


With rising popularity of SaaS and other kinds of resource environments such are data storing clouds, business world comes to an important steppingstone, when capabilities of these concepts need to be measured and when companies need to determine whether these smart solutions will be more beneficiary for them than standard software installations and other on-premise solutions.

When it comes to big corporate entities, on-premise installations are still the only way to use software. Of course we should have in mind that these companies have big and competent IT departments and enough money to buy all legal software they need. Small and medium businesses don’t have such a big talent pool and monetary capacity which is why they often switch to SaaS. In this article we will inspect whether SaaS is the right choice for startups.

Is It Cheaper?

This is one of the prime concerns for every entrepreneur who wants to switch all of his/her company software to “Software as a service” model. SaaS is definitely less expensive than on-premise software, especially when we are talking about small businesses with limited software needs. On-premise software requires:

  • Internal infrastructure costs;
  • Licensing costs;
  • Support costs;

All these are usually included in most SaaS packages that are far cheaper than any decent on-premise software. That means that SaaS enables entrepreneurs to direct some of the funds they previously used for software costs to upgrading their business in other ways.

Only additional cost that may come up, is the cost of migration of highly integrated applications from company to cloud servers. This cost can out-shadow some of the SaaS benefits, but since most small and medium sized startups are using applications that only have one or a few standard interfaces, it is really easy for them to move all of their business to the cloud, cheap and in a timely-manner. Read more…