Published On: September 15th, 2018 / Last Updated: December 25th, 2021 / 4.2 min read /

Cloud (SaaS) vs On-Premise HR and Payroll system

A lot of HR Managers always have a choice, as there are options to choose between Cloud and On-Premise versions of the same solution these days.  There are lot of reasons to choose either.  We take a look at some of the key considerations which will help you decide which one suits your needs best.

An On-Premise version means you purchase software for a one time fee and it is installed on your premises i.e. you are responsible for the IT hardware and software, the data resides within your company premises, you are responsible for any future upgrades related to IT hardware and software, as the customer.  Not to mention any backups, downtime, etc needs to be planned at your end as well.

The Cloud (SaaS) version – or commonly known as (Software-as-a-Service) SaaS is a service where you pay the subscription fee usually on a monthly or yearly basis, to use the software that runs on the IT infrastructure of the cloud service provider, the IT infrastructure is usually hosted in a Data Center with another provider, but maintained and managed by the supplier, so you as a customer need not worry about the downtime or backups or upgrades or any other routine, IT infrastructure management activities.

With the On-Premise version your setup cost is always higher, you need to invest in the IT hardware and software infrastructure if you don’t already have one.  You will need to  do regular IT maintenance like backups and upgrades.  This comes with a reasonable amount of hidden costs, which may you may not account for, as the supplier is only responsible for providing the solution installation with no involvement on the IT infrastructure.  Changing of security standards and other related aspects.

With the Cloud Version, you just need to pay subscription charges monthly/quarterly/yearly, instead of purchasing the software.  This means that the entry point to using a cloud version or the setup cost is usually very low as compared to the on premise version.

Annual Maintenance
The On-Premise version implementation will usually need to be accompanied with an ongoing annual maintenance contract for new updates, support and some patches.

The Cloud version usually will have all updates, patches included, as long as you have an active subscription.

Implementation Time
On-Premise version requires more time to implement, as the client needs to have the IT infrastructure ready, which may include procuring new hard or software licenses.

The Cloud version the platform is already built for delivering the software as a service, meaning the service is ready, you just need to pay for subscription and then you are on it.

With the On-Premise solution, you will have high upfront costs for licensing, hence the risk, if the project is not successful, you may loose license costs and also the IT infrastructure you may have incurred.

The Cloud version usually gives you the ability to try, most cloud software providers also offer a free trial rom 7 days to a maximum of 60 days, so you can actually try out the solution before committing the investment.  One more interesting aspect is, if the cloud version does not meet your expectation you can always walk out of the contract with only a month’s service or at maximum a 3 month’s service fee as penalty, means you really do not incur any upfront costs when you want to use it or when you do not want to use it, when compared to On-Premise version.

One more fact is your service provider is usually responsible for the service availability, so you really do not have to worry about costly hardware or software failure. when using the cloud version

Security of Data
With  the use of On-Premise version, the network security, transport security of data, email security transmission lies with you as a customer, so you need to ensure all your IT infrastructure is up to the latest standards.

With the cloud version, the cloud service provider is usually responsible and will have extra tools available, as they use industry leading data centers like Amazon Web Services, Google Cloud, Microsoft Azure, to deliver the service, as these data centers have built-in security features, which the cloud service providers use, to offer more security for your data.

Internet Connection
If you do not have reliable internet connectivity then On-Premise version is a good option.  As you can use the solution from within your organization like an intranet, rather than through the internet.

Cloud version requires a reasonable internet connection, if your company is in area where internet connectivity is patchy, there could be an issue with users accessing the solution.

HR Chronicle is a leading Cloud Based HR and Payroll Management solution, we have served our customers since 2006 that’s when the very first version of HR Chronicle came out, HR Chronicle is available in 2 flavors, Cloud Based and On Premise. To know more give us a shout, we will happy to discuss more.

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