Cloud Based vs On Premise Accounting System

PUBLISHED JUNE 6, 2019

 

One of the most significant factors in choosing an Accounting System is whether you want the system to be on premise or in cloud. First, let us know the meaning of On-premise and Cloud-based.

What is On-premise?

In an Accounting System like QNE Optimum and SAP Business One, On-premise means the Accounting Software is installed and runs on computers located within the premises of the person or organization.

Popular On-Premise Accounting Software includes QNE Optimum Accounting Software, SAP Business One and Oracle Netsuite.

Cloud-based Software

It refers to the applications, software like Accounting, Payroll, POS or services that are made available to the users via the Internet from a cloud computing provider’s server. Companies often chose Cloud-based Accounting Software to lessen the infrastructure cost and focusing on other business’ demands.

Cloud-based vs On-premise Accounting System

Knowing your company’s capability will help you select what will work. To dig deeper, below is the list of the important details that the company must consider:

Pricing and Implementation of Cloud Accounting Software vs. On-Premise Accounting Software

In Cloud-based software, the provider hosts the software using their server and accessed through a web browser.

While the On-premise software the system is installed locally in the company’s server and workstations.

When it comes to pricing, cloud software is priced via subscription based. For example, an individual or a company will pay monthly or annual fee to continue the use and support of the system. Most of the time, annual subscription will cost lesser.

On-premise software can be availed one-time with a specific price for a perpetual license. The fee will depend on the company’s requirements and the number of concurrent users. Other fees include support, maintenance and updates which is usually free for a year or two depending on the provider.

This means, on-premise system will demand a higher initial investment cost for an individual or a company compare to cloud-based system. While cloud-based system is considered as continuous cost that the organization must pay.

Cloud-based Accounting Software Advantages and Disadvantages

Security is the main concern of the companies with cloud-based software. Companies worry about hacking and lost of important and private data. That is why a lot of cloud-based software providers have implemented strict standards when it comes to managing client’s data.

This is the main reason why cloud-based software has growing number of users and it is more ideal for startup who needs an accounting software but wants a lower initial cost.

 

ADVANTAGES DISADVANTAGES
CostLower Initial InvestmentMay cost higher over time of use
Reliable Cost Estimate
Minor hardware investment
SecuritySystem and Database are in the hands of the providerData security concerns for the company
CustomizationContinuous updates from the providerLimited customized features or reports
ImplementationShorter Implementation timeSometimes self-taught

 

On-premise Accounting Software Advantages and Disadvantages

The main advantage of an On-premise software is that the company has a full-control of their data and customization is more convenient.

ADVANTAGES DISADVANTAGES
CostLong-term cost is lesserHigher initial investment
Riskier cost for investment
Company needs to invest in Hardware and IT setup
SecurityDatabase is maintained by the companyData security must be maintained by the company and a knowledgeable person must be in-charge
CustomizationCustomization is more flexibleCustomization may delay implementation
System Updates may affect customized features
ImplementationCompany has control of the implementationLonger implementation process

 

In general, Accounting Software type will be based on the requirement and capacity of the business, whether it is cloud-based or on-premise. Nowadays, accounting software like QNE Optimum, SAP Business One and Oracle Netsuite offer more option to the companies on how they will handle their data and transactions.