Cloud or on-premise? This question arises when you have to decide on a shop system. One thing is clear: the cloud business is booming! Even the initially biggest fears, such as the loss of control over costs and own data, are gradually decreasing. The reason for this is that the providers of these cloud solutions have of course also further developed their products and can now increasingly convince with high security standards. But are cloud-based e-commerce platforms really the better choice? In order to simplify the decision for you, we will examine both on-premise shop systems and cloud-based solutions from both sides in this article. First and foremost, however, we need to clarify what the two terms actually mean.
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What is On-Premise?
On-premise in German means something like "on site" or "local" and accordingly stands for the fact that the e-commerce platform must be installed on your own servers or in the cloud you set up yourself.
The question of whether the new store system should be on-premise or cloud-based is essentially about how the software is made available to the company's employees.
What is a cloud?
In a cloud store system, software and the IT infrastructure are operated at an external IT service provider and used by the customer as a service.
Basically, then, a distinction is made between a local, self-managed software version and decentralized hosting. To help you decide, we will now show you the advantages and disadvantages of both variants. Let's start with on-premise.
Reading tip: WooCommerce vs. Shopify, which of the two store systems is the better one? We have compared them in this article according to 5 criteria.
On-premise advantages and disadvantages
"Never change a running system" is probably still the motto of many companies. In some cases, they have simply become accustomed to the program over decades and have never had any problems with it. The clear advantage here lies in the ownership of the software: Once you have purchased the product, you can use the software indefinitely. As a rule, "only" the one-time purchase fee is incurred. However, the initial cost is often a major hurdle, especially for small and medium-sized companies - for them it is easier to pay the usage fees in the form of a monthly subscription. In addition, it is precisely in the corporate environment that licenses are used. This means that the shop system cannot be used by an unlimited number of employees. Therefore, in many cases, separate licenses have to be purchased. In addition, independent maintenance is also associated with costs. On-premise solutions are therefore not as cheap as you might think at first.
Good software is constantly updated: Updates extend a program's functionality, improve stability or close security gaps. These updates also require users to install them regularly, which means extra work. Installing updates and bug fixes can be a not inconsiderable effort, especially in larger companies. In addition, support services are also usually limited. Some software vendors have at some point stopped developing the old program and instead moved on to new products. In this case, one is faced with two options: You can continue to use the old version and risk your online store becoming obsolete after a while, or you can invest in a new product.
Another advantage of on-premise store systems that should not be neglected is that all data remains in the hands of the user. While cloud solutions require transferring information to a remote server in the data center, with on-premise e-commerce platforms you keep all your data yourself - unless you opt for cloud storage.
In summary, these are the strengths and weaknesses of on-prem solutions:
| Advantages | Disadvantages |
|---|---|
| Costs: With on-premise software, there are no ongoing costs for you. | Compatibility: Your devices must be suitable for the software. |
| Control: You decide what happens to the software. | Additional work: The maintenance of the software causes additional work. |
| Data protection: Sensitive data is not necessarily passed on to third parties. | Skalierbarkeit: Lizenzen sind teuer und müssen langfristig erworben werden. |
| Flexibility: Since you use the software on your own PC, you can use the program without any restrictions at any time. | Support: Further development of the software is usually discontinued after some time. |
Reading tip: Find out why fashion label LIVE FAST DIE YOUNG switched from Shopware to Shopify in this post from the founders themselves.
Advantages and disadvantages cloud
With cloud computing, online store operators now have further options. Instead of buying the corresponding software, installing it on the PC and using it, they can also opt for a subscription.
Manufacturers host the e-commerce platform software in data centers and provide users with access. The user's own PC accesses online via the web browser or a previously installed client, while the actual computing power takes place in an external data center.
The clear advantage is that the hardware is constantly maintained by specialist personnel and the software is also always up to date without your intervention. You therefore do not have to worry about independent updates. Since the software is location-independent, you can access the program from anywhere.
Professional software can be expensive. On-premise solutions are often paid for by a one-time purchase, but such a large investment is not always feasible, especially for smaller companies and founders. What's more, as the business grows and demand increases, the program may no longer meet requirements. With cloud store system providers, you can usually choose between a monthly or annual payment and thus have the option of switching to a different product or adding additional features and employee access at a favorable price.
Reading tip: Shopify offers an enterprise solution. In this post, we'll tell you when you should take the next step and switch to Shopify Plus as well.
However, the fact that you have to hand over control to the provider can be problematic. Because if the latter can or wants to discontinue the offer or pause the maintenance work for any reason, this can have a negative impact on your shop.
All in all, the advantages and disadvantages of cloud-based e-commerce platforms can be summarized as follows:
| Vorteile | Nachteile |
|---|---|
| Infrastructure: You do not need your own server landscape to operate cloud solutions. | Dependency: If the provider stops operating the cloud store system, you will no longer be able to use the software. |
| Maintenance: Your employees do not have any additional work due to maintenance work or the installation of updates. | |
| Costs: The acquisition costs are relatively low, as cloud store systems are subscription models. | |
| Scalability: Additional functions and further employee accesses can be easily added. | |
| Fail-safe: If your local server catches fire, you're offline. With a decentralized cloud, this would not be a problem: the system would simply continue to run elsewhere. |
Reading tip: In this article, we explain which things to consider when taking the step towards internationalization and how international sales can be implemented with Shopify.
On-Premise vs. Cloud: The Direct Comparison
| On-Premise | Cloud | |
|---|---|---|
| Infrastructure | Local infrastructure | Outsourced infrastructure |
| Costs | On-premise requires a significant initial investment to purchase hardware, software licenses and set up a data center. | Cloud-Dienste verwenden oft ein Pay-as-you-go-Modell, bei dem Unternehmen nur für die Ressourcen bezahlen, die sie tatsächlich nutzen. Dies reduziert anfängliche Investitionen und ermöglicht eine bessere Budgetkontrolle. |
| Maintenance | Companies are responsible for the regular maintenance, updating, security and troubleshooting of their local infrastructure. This requires technical expertise and resources. | Cloud providers are responsible for maintaining, updating and securing the infrastructure. Companies have to worry less about these aspects. |
| Scalability | Scaling requires purchasing new hardware and provisioning resources, which takes time. | Rapid scaling as needed. Resources can be increased or decreased in real time. |
| Control | Companies have full control over their systems, making customizations and security configurations easier. | Control lies with the provider, which means less freedom to customize. Nevertheless, cloud platforms often offer configuration options. |
| Security | Companies have direct control over security measures, but they themselves must ensure implementation and monitoring. | Cloud providers are investing in security technologies. Yet companies have less direct control over their data. |
| Flexibility | More customization options for specific requirements. However, this can mean longer development times. | Fast implementation of e-commerce platforms. Some customization is possible, but less comprehensive. |
How should online shop operators decide?
As you can see, both on-premise solutions and cloud computing models have their advantages and disadvantages. However, the trend is clearly towards the cloud, as the advantages outweigh the disadvantages for most companies - regardless of their size and/or industry. The fact that the maintenance effort is reduced, initial costs are saved and modern software can be used at any time offers greater added value today than the fact that a solution can actually be called one's own. With Shopify and Shopify Plus, companies have a cloud-based commerce platform at their disposal. With it, they enjoy intuitive store management that can be controlled quickly and easily even from a smartphone.
Of course we are happy to support you with your e-commerce project.
If you have any questions then feel free to contact us.
Conclusion
The considerations of on-premise versus cloud shop systems suggest that there is no clear answer to the question of what is generally the better choice. Both solutions have their advantages and disadvantages. So you should consider your individual needs. Overall, on-premise solutions offer more security, but also require significantly more effort. Cloud software, on the other hand, gives you and your employees the most flexibility and is also cheaper to buy. How you decide ultimately depends on the corporate strategy.
Reading tip: Learn why Shopify is the perfect tool for direct-to-consumer strategy in this blog post.
Frequently asked questions about On Premise vs Cloud
What is the difference between on-premise and cloud?
With on-premise, the software is installed locally on your own server. In contrast, with a cloud store system, the software is managed at a decentralized hosting and accessed through the browser.
Is cloud cheaper than on-premise?
With on-premise, there is a fixed price right from the start - namely the purchase price for the software modules. However, there are also software maintenance and servicing costs, as well as additional costs for upgrades in order to remain scalable. With cloud systems, on the other hand, the acquisition costs are relatively low and, above all, more predictable, as cloud systems are subscription models. Maintenance work and costs on the server are also eliminated here. The cloud is therefore cheaper in the long term.
Why cloud and not on-premise?
Some of the advantages that a cloud system brings are infrastructure, reduced maintenance, transparent costs, scalability and resilience - even with high concurrent user access.
What is On-Premise?
On-premise translates as "local" or "on-site" and stands for the fact that e-commerce platform must be installed on the servers or in the self-established cloud of e-commerce companies.
When is the cloud worthwhile?
Cloud-based systems are advantageous when flexibility, scalability and low initial investment are key, as they offer faster implementation, maintenance and regular updates. The choice depends on a company's individual needs, resources and goals.
