accounting software cloud
19 October 2018

On-Premise or Cloud Accounting Software?

How to Decide What’s Right for You

You’ve probably seen your fair share of products and applications heralded as the next best thing in construction technology — the cloud included. However, just because something is pushed as “revolutionary” or because the reviews are good, it doesn’t always mean it’s the right investment for your company. Before you spend money on any new piece of technology, it’s important to ask if what seems to be right for everyone else is actually what’s right for you.

It’s a question that’s especially important when debating whether cloud accounting software or on-premise accounting software is better for your company.

On-Premise and Cloud Accounting Software

The cloud is a platform that stores data and software online, rather than locally on your computer like on-premise applications do. This enables the data to be accessible from anywhere and any device at any time as long as there’s an internet connection.

With a multitude of benefits and tight security, cloud software seems like an easy choice for most contractors — and often times, it’s the right one. But that doesn’t mean it’s the only correct option.

Both cloud hosted and on-premise construction accounting software can be beneficial to different contractors. So before you make a purchase, ask yourself a few questions:

  • What does our current software look like: on-premise or cloud?
  • How robust are our hardware and servers?
  • What does our IT team look like?
  • What’s our comfort level?
  • Do we have an IT strategy for the next three, five and 10 years?

Important Questions to Ask Your Company

1. What Does Our Current Software Look Like?

When considering whether to purchase a cloud software solution or an on-premise software solution, you should first look at where you’re currently hosting your software. For example, you might host the majority of your software on-site — meaning it’s installed on a local, company server. In that case, it might not make much sense to pay to host one application on the cloud when you’re already paying for on-site infrastructure (servers, IT team, etc.). Unless, of course, you’re planning to phase out all on-premise applications in the near future.

Which may be dependent on the next question:

2. How Robust Are Our Hardware and Servers?

On-premise applications require good, sometimes specific hardware and a strong IT infrastructure to host the software. This can lead to an increase in initial costs if these resources aren’t already in place. However, with a cloud software solution, your vendor hosts the software and backs up on your data on secure, off-site servers. And outside maintenance included, so an IT team often isn’t required.

That means your next question should be:

3. What Does Our IT Team Look Like?

If you’re using an on-premise software solution, you need a strong IT team — either from a dedicated in-house IT department or outsourced from another company. This IT team must also be able to run maintenance for local servers and software, which could mean paying for additional staff. If the hardware and infrastructure are already in place, however, the value of on-premise software is something to consider without the additional maintenance costs you may see with the cloud.

On the other hand, with the cloud there’s less reliance on IT professionals because there’s no need for heavy-duty hardware to maintain or a sophisticated infrastructure to manage. Instead, the software vendor deals with managing the IT side.

So you should think about how you’d like your company’s IT infrastructure to develop or scale down the line, asking:

4. What’s Our IT Strategy for the Next Three, Five and 10 years?

Do you have plans to keep your current infrastructure? Are you looking to move all your core business applications to the cloud, or will some remain on-premise for years? If so, does it make sense for your company to have some in one environment and some in another? Contractors should evaluate their full software situation before they move forward with any purchase. This means looking at:

  • what applications they have on the cloud
  • what applications they have on-premise
  • and what their expected future is with each of these.

For example, if you’re looking to get cloud accounting software, you may want to consider whether and when you can move your estimating and project management to the cloud as well. Do your vendors offer the option to move, or would you switch to a vendor that already uses cloud software? You might also decide that you’ve made several other on-premise investments and want to wait until you’ve reached the end of their usable life.

With a large purchase, it's vital that you have some plan in place as to how the software is going to be integrated, used and maintained. Click To Tweet

With a large purchase it’s vital that you have some plan in place as to how the software is going to be integrated, used and maintained, which means considering:

5. What’s Our Comfort Level?

Are you okay with full ownership as well as full responsibility? Or would you prefer unlimited access (anytime, anywhere) while giving up some control? Some companies love the idea of having their ERP and accounting software in the cloud. But it’s important to ask how well you know the software vendor and whether you’re comfortable with your sensitive payroll and financial information.

In comparison, when you purchase on-premise software you own that system outright. You also have near complete control over what happens with that system, including customizations, updates and other maintenance items. And you can schedule your own maintenance and downtime as convenient.

With cloud software applications, however, your vendor is in control of when and what updates take place. This means you won’t have the option to retain an older version of a piece of software, even if you’d like to. When it updates to the newest version, it updates. The flip side of this is that scheduling for updates and backups is never something you have to worry about. By delegating that to the cloud, it’s all taken care of automatically.

Before you spend money on any new piece of technology, it’s important to ask if what seems to be right for everyone else is actually what’s right for *you.* Click To Tweet

Still Not Sure?

There are trade-offs with each system, so here’s a simplified breakdown of what you need to know:

On-Premise Software Cloud Software
You manually backup your data. Data is automatically backed up by your cloud service provider.
You can access the software on any computer the software is installed on. You can access the software on anywhere on any internet-connected computer.
You don’t need the internet to access the software. You need an internet connection to access the full software.
You’re responsible for performing all maintenance, security and updates on the software on your schedule. Software maintenance, security and updates are outsourced to a different party on their own schedule.
You usually pay a larger, onetime cost. You might pay a low, upfront cost, plus a low ongoing subscription fee.
You own the software outright. You have access to the software for as long as you subscribe.

Make sure you explore all of the options that might be a fit for you. You can begin by taking a video tour of FOUNDATION construction accounting software, which is available either on-premise or on the cloud. And we can help talk you through the best option for your construction business.

Preview FOUNDATION Now