What does On-Premise mean?

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For more and more companies, cloud is becoming the absolute solution for a wide range of operational challenges. On-premise can be described as the opposite of cloud computing. What exactly is hidden behind the term and whether on-premise is still appropriate or already obsolete, we reveal in the following article.

What is on-premise?

The term on-premise or on-premise software refers to the usage model for software that has been the standard for all end users for decades: You buy software or a license for software and then download it to your own servers. In other words, the software runs in-house (on-premise) and not at an external hardware provider.

As mentioned earlier, this has been the most common solution for software for decades, for both home and business end users. Since around 2010, however, on-premise software has been increasingly replaced by cloud computing. However, it is important to add that one cloud model is equivalent to on-premise software under certain circumstances: the private cloud.

Because if the private cloud is also hosted internally, then both software and hardware solutions are again run on-premise. However, the private cloud is superior to the on-premise solution in that the hardware is also run by a host on private devices. We'll reveal exactly what that means and which solution is best for your business in the next sections.

Advantages and disadvantages of on-premise

One of the most important advantages of on-premise solutions is that users retain full control over software and hardware solutions. This is especially important for areas with particularly sensitive data sets, such as financial or security companies, as it ensures maximum data protection.

For German companies, this aspect is even more important: the particularly strict German and European data protection regulations mean that German companies often have to take additional data protection and compliance measures in order to comply with the applicable laws. This is much easier if you have unrestricted control over your own data.

Another advantage of the on-premise model is that it allows you to tailor software applications and IT infrastructures precisely to your own requirements and needs. This applies not only to the protection of data, but also to the scope or performance of the servers or special features of the software models. With on-premise, you can simply put together your own IT.

However, the on-premise model also has many disadvantages. This is especially true for the scalability and cost of such a solution. On-premise is also inferior to other models when it comes to updates or expanding your own services. These disadvantages become particularly clear when comparing on-premises solutions with cloud computing.

For a better overview, we have once again summarized the most important advantages and disadvantages here.


  • Full control over all data and processes
  • Infrastructure and software can be tailored exactly to your own requirements


  • Not flexible
  • Updates must be carried out by the customer
  • Expensive due to own infrastructure
  • IT specialists required for operation
  • Often cannot be combined with external solutions
  • Very expensive to maintain

On-Premise vs. Cloud

As already mentioned, on-premise has been increasingly displaced by the cloud in recent years. And there is a reason for this. Because as already mentioned, on-premise means that the entire infrastructure is run internally and any external software is also run exclusively on the internal hardware.

Logically, this means that the company alone is responsible for building and maintaining the infrastructure. This in turn means that the company must bear the costs for servers, real estate, IT specialists and energy itself. Especially for small and medium-sized companies, such a solution is often unrealistic if one wants to benefit from all the advantages of modern software applications.

In addition, all updates to the company's own software must be carried out by the company itself, which is an incredible effort, especially for comprehensive applications. If at some point the software becomes obsolete and is no longer offered by the provider, one's own system has to be rebuilt from scratch.

And that's where cloud computing comes in. Because if you as a company opt for a public cloud, for example, then the provider takes on the entire responsibility for all the problems described above. For example, all the hardware is provided by the provider, which can save a company an incredible amount of money.

At the same time, updates are carried out automatically and the provider ensures that as a customer you always receive the latest product. However, it should be noted that the largest cloud providers all come from the USA and therefore do not comply with most German data protection regulations.

Hybrid cloud as the best solution

If you do not want to do without either the advantages of an on-premise application or the advantages of a cloud for your company, then the hybrid cloud is certainly the best solution for you. This hybrid form combines on-premise solutions with the cloud of a third-party provider and thus enables cost control and high flexibility while at the same time providing absolute disposal of sensitive data.

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