What are the Differences Between On-Demand and On-Premise Software?
The Old Paradigm: On-Premise or Client-Server-Based Software:
- Is accessed on the end-users site
- Resides on an in-house server
- Requires the end-user/IT staff to maintain the software and security
- Requires the end-user/IT staff to purchase, support and maintain hardware/servers
- May require a lengthy and costly Implementation
The New Paradigm: On-Demand Software:
- Is accessed via the Internet and available from anywhere
- Is maintained by the solution provider
- Is Hosted or resides at a centralized facility
- Is capable of immediate/quick utilization (hence “on-demand”)
- Includes frequent updates and functionality upgrades
- Includes support
How is enterprise software sold?
Perpetual License
Software is purchased up front, and the end-user owns the software license. The application is typically installed on-site, on a client's own servers. The client is responsible for installing upgrades, and maintaining its own IT infrastructure. Clients pay an annual "maintenance" fee to receive upgrades and support.
Software as a Service (SaaS)
Software is paid on a consumption basis and the application and server side hardware infrastructure is hosted, maintained, enhanced, managed, and upgraded the SaaS provider. SaaS applications:
- Have no upfront license fees associated with the use of the software (a subscription fee is generally billed monthly with a one- to two-year contract).
- Require no IT infrastructure at the client site other than desktop devices and Internet access.
- Are deployed as multitenant (multiple customers sharing a single copy of the software) or single-tenant standard code maintained and upgraded by the vendor.
- Have support and upgrades included in the monthly service fee.
The Hybrid Model: Perpetual License in a Hosted Environment
Datacom sells its solutions via a hybrid model. The application is hosted, maintained, enhanced, managed, and upgraded by Datacom.
However, end-users purchase a perpetual license for each concurrent user. Implementation, data import, training and materials are all included in that price. The end-users received all of the benefits of an On-Demand/Hosted solution, while still allowing the end-user to own the software – increasing the rate of Return on Investment and Reducing Costs over time.
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