Cloud computing and on-premise in logistics: a comparison of advantages and disadvantages

Cloud computing and on-premise solutions are setting a crucial technological course in modern logistics, with each model bringing its own advantages and disadvantages. In this article, we will take an in-depth look at the differences, benefits and challenges of these two approaches to help you make an informed decision for your logistics business. Let's dive into the fascinating world of cloud computing and on-premise in logistics.

Who still buys software in the 21st century? Digitization is advancing and responsibility for IT issues is shifting more and more towards specialist departments, which is why logistics managers are now also confronted with the question of which IT solution is most suitable for their company. Numerous factors play a role in the decision: Can the software support and increase the workflow? Is the software compatible with other systems? In addition, it is not only the financial consideration that is plays into the decision. However, the most important question before a new purchase is: Should the software be purchased or only rented?

Essentially, since the rise of cloud technologies, there are two options: On-Premise (buying the software) and SaaS (Software as a Service). Here, on-premise is understood to mean hosting at the customer's premises - an integration project where the software is purchased - while SaaS is where the data is hosted by the software provider - rented via the cloud. Both of these types have advantages and disadvantages that need to be weighed up before making a purchase.

On-Premise at a glance

If you choose to do the software rollout directly at your site, the common term is on-premise, or "on-prem" for short. Before modern cloud solutions, it was the standard approach to rolling out new software in an organization. The company's internal IT department prepared the hardware structure needed for the software and ultimately also supported the new software. Among other things, this was reflected in the companies' employee costs.

The advantages of on-premise

✔ Control over the technical infrastructure

✔ Usually more attractive financially with the necessary technical prerequisites and long-term use

The disadvantages of on-premise

✘ In-house maintenance is extremely time-consuming and resource-intensive

✘ High technical know-how of IT staff is required

✘ Classic investment risk

✘ Ensuring availability and data security is associated with high costs (updates, the latest versions and support usually have to be bought in).

SaaS or cloud services at a glance

The development story continues: about 20 years ago, software companies and third-party providers finally started hosting via an external server. While server hardware itself had become more affordable, server maintenance staff still incurred additional costs.  

Cloud services are a subset of the so-called hosting services, which include the following three subgroups:

  • Software as a Service (SaaS)
  • Infrastructure as a Service (IaaS)
  • Platform as a Service (PaaS)

SaaS itself is a software hosting model in which the application software as well as the databases are provided via a third-party provider. Customers themselves can access all the data via a web browser - you rent the software. The main feature of SaaS is that the software is licensed on a subscription basis and centrally hosted - hence the name "on-demand software".

In simplified terms, cloud computing can be understood as the provision of computer services via the Internet (= "the cloud"). Although initially the prejudice that cloud systems were insecure prevailed, confidence in SaaS services has now grown as security requirements have also increased.

Advantages of cloud services/SaaS

✔ No investment costs before the start of the project

✔ Speed due to on-demand applications

✔ More flexibility and scalability, you can upgrade at any time and are not in the way of business growth due to long contract terms

✔ No additional staff hours in IT

✔ Reliable data backup and recovery and customer service

Disadvantages of cloud services/SaaS

✘ High dependence on providers (trust presupposed)

SaaS or on-premise for your company? Which is better?

There is no one-size-fits-all solution for all businesses.

Which model is better for your business depends mainly on your requirements and your own resources. Especially in large enterprises, on-premise is still considered the standard. Small and medium-sized businesses, on the other hand, can benefit greatly from the flexibility and cost control offered by SaaS.

At TradeLink, we have identified the central problem of the logistics industry: there is no coordination between all the players in the supply chain. Each company is linked to an average of 200 other companies - contract logistics partners, carriers, customers, etc. - and must coordinate with them. - and must coordinate with them. In addition, there is the internal coordination between purchasing, production, sales and logistics.  

Obviously, this problem cannot be addressed by means of a static software solution, which is why we aim to exchange information between all parties via the cloud. By using our tool, our users can reduce their truck idle time and downtime by an average of 60%. Since time-consuming processes via phone, email and Excel are replaced by our tool, it is possible to save thousands of additional employee hours.

Would you like to learn more about your options with TradeLink? Book your personal demo now and let one of our logistics experts guide you through the tool!

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