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On-Premise vs. Cloud: The right choice for your company‘s software usage

The rapid pace of change in the IT industry is well known: yesterday, on-premise software was considered state-of-the-art; today, cloud alternatives are gaining in popularity. This change presents companies with the question of which strategy to choose: hosting applications on-premise or in the cloud? We explain the advantages of each solution and why a combination of the two approaches may even be the best solution for you.

Data security vs. flexibility: the advantages and disadvantages of on-premise and cloud

With the on-premise model, the software is purchased once and licensing is device- or user-based. The software is installed locally and is therefore located on the company‘s servers. This is a major advantage, as many companies already have an extensive IT infrastructure and want to build on the investments they have already made. By installing applications locally, they not only retain control over their data, but can also protect it in accordance with their own compliance requirements. Another advantage is that on-premise does not require internet access and can also be operated offline.

But what about the cloud? The alternative of hosting software and data in the cloud enables easy access from anywhere in the world and promotes real-time collaboration. Cloud computing undoubtedly offers flexibility and scalability, making it an attractive option for companies. In particular, large companies often adopt a cloud-first strategy, where the cloud is seen as the preferred approach for developing and delivering IT solutions. However, this strategy also brings along risks, such as significantly higher costs, long contract terms and the risk of „blind spots“. Complex licensing and the variety of payment models make it difficult to control costs and can lead to over- or under-licensing. In addition, cloud providers are often also software providers. As a result, the decision for a software license often goes hand in hand with the decision for a cloud provider. If you want to use software from other providers in the cloud, it is often only feasible in conjunction with high costs. In addition, operating software in the cloud requires user-based licensing, which is associated with complex administration of licenses via a cloud portal.

More and more companies are also increasingly recognizing other potential disadvantages, such as controversial data protection and dependence on the provider.

But which strategy is the right choice for your company? An interesting middle ground is emerging here: The combination of both approaches.

The hybrid solution: a combination of on-premise and cloud licenses

An optimal strategy is a combination of on-premise and cloud. The hybrid intermediate path enables companies to manage resources in a future-proof manner, guaranteeing flexibility and operating economically at the same time. Areas in which locally installed software brings strategic and economic benefits can continue to be managed in-house, while areas in which cloud products make more sense are covered by cloud contracts. In this way, companies can retain control over their sensitive data and make individual adjustments, while at the same time not having to forego the advantages of scalability and flexibility.

A study by Cloudera* also shows that the hybrid solution is gaining ground, revealing that around 76% of companies in the EMEA region want to bring back some of their data from the cloud by 2026.

The greatest added value of the two approaches therefore lies in their combination. A hybrid strategy makes it possible to combine local installations and cloud solutions as required in order to meet the requirements of different areas of the company and at the same time make optimum use of the respective benefits. This approach is particularly attractive for medium-sized companies that do not want to reinvent the wheel, but still want to meet future-oriented requirements and rapid changes.

Used licenses in the hybrid solution

But what about the costs? With on-premise solutions, you buy the software once at a fixed price. With a cloud, you rent the service from the provider on a monthly or even annual basis, depending on the contract. The storage space can be adjusted dynamically. But how can costs be kept as low as possible in this confusing web of licenses and prices?

Used software is the answer to this question. The initial concerns regarding legal certainty have already been invalidated by the European Court of Justice ruling many years ago and companies are recognising the considerable savings potential that the purchase of used licenses brings. In addition to cloud computing, the demand for used software licenses is also growing steadily. For a good reason: used licenses are offered at significantly lower prices than new ones. And, companies do not experience any disadvantages, as the used product is not a physical one, which means there is no risk of wear and tear. As a result, SMEs are also opting to purchase used software - often in parallel with the use of cloud subscription licenses.

The growing demand for software applications and frequent price increases in the cloud segment are contributing to the attractiveness of used licenses. Companies are becoming increasingly aware of the high costs of subscription models and are thus recognizing the cost benefits of used software. In addition, used licenses can be resold at any time, which is not possible with the rental model in the cloud.

Save money securely with Soft & Cloud

When buying used software, trust in the seller is essential. Soft & Cloud offers you only audit-proof, original licenses from Microsoft. Our wide product portfolio and high availability – even of the latest versions shortly after release – characterise our offering. The transfer of usage rights is in compliance with the European Court of Justice – as confirmed by TÜV IT. We were the first provider on the market to receive the TÜV IT certificate for our secure license transfer. More than 5,000 satisfied customers already trust our services.

Not sure which licenses you need and want to avoid over- or underlicensing? We will be happy to advise you and find the right solution for you.