Software-as-a-Service is challenging the paradigm that software is a thing you buy, take back to your office and install. Looking back some day, we might shake our heads and wonder why any enterprise ever thought it had to purchase and physically install a copy of millions of lines of code that ran on a computer within its premises, just to transact day to day business.

On-premise going the way of cassette tapes……?

The market is receptive to more and more SaaS solutions, and software firms are positioning themselves to offer those products. Most of the big, traditionally on-premise software providers now offer at least some of their applications in SaaS form. For you, this will mean more choices.

But remember this: SaaS applications do not guarantee perfect performance and 100% uptime. They are still computer programs running on a server somewhere, and if those programs are buggy, unstable, corrupted, or lack proper expert support you will land in the money pit just as sure as if you bought that same buggy and unstable application and installed it in your own data center.

Are there any good reasons why you would want a traditional on-premise application?

Yes: security is one reason, in certain circumstances. No matter how demonstrably secure a third party may seem, you simply may not want to entrust your data security to a third party, period.

Your customers, particularly, may want the relative or perceived assurance of your own firewall surrounding your applications and their data. Their business relationship is with you, not the company hosting your applications.

You may already have economies of scale suited to on-premise hosting – plenty of server capacity, a built-in support staff, and developers on your team who are capable of building out the application the way you want it.

If you are positioning the application to be used by several divisions within your company, you may also want central on-premise hosting. You may want to tightly control modifications to the “core” system and also manage access permission levels among users, as well as the total number of users. These actions can significantly reduce per-user costs.

With SaaS applications, you still need to do the same due diligence you would do with a traditional on-premise application. The fit analysis, testing, and project management are largely the same, as are the same precautions to avoid the money pit. You can still spend a fortune modifying a SaaS application, as well as integrating it to your other systems and pulling data out of it for analysis purposes.