Wikipedia's definition of on premise software:
"On-premises software is installed and run on computers on the premises (in the building) of the person or organization using the software, rather than at a remote facility, such as at a server farm or cloud somewhere on the internet. .... The on-premises approach to deploying and using business software was the most common until around 2005, when software running at a remote location became widely available and adopted. The new, alternative deployment and use model typically uses the Internet to remove the need for the user to install any software on premises and had other accompanying benefits: running software remotely can result in considerable cost savings because of reduced staffing, maintenance, power consumption, and other factors...."
There are a lot of benefits of cloud software over traditional on premise solutions. Consider the following:
The most attractive incentive for companies to adopt Cloud is the savings on internal IT expenses. And the savings are not just for the software licenses. Capital costs for installation and maintenance of hardware and personnel costs far exceed the software licensing costs in most enterprises. This incentive is particularly compelling for enterprises whose primary line of business is not IT.
Economy of Scale
Cloud providers can achieve lower costs of software development and deployment through specialization and economies of scale. This lower cost of software per customer enables Cloud providers to reach to more customers who might not have adopted the software due to higher costs.
Getting started with a Cloud application entails signing a contract and paying subscription fees versus the huge one time fees of software acquisition. Backing out is equally painless by terminating the subscription. The enterprise is not left with a capital loss in an infrastructure it cannot use anymore. It can boldly invest in new technologies without significant loss of time and money.
Cloud providers have the liberty of architecting the software solution and choosing all the components – hardware, operating systems, networking – for optimum results. They do not have to worry like traditional software vendors about software distribution problems like backward compatibility with legacy hardware, operating systems and protocols. Their software needs only to be tailored to their environment. This adds predictability to the Software development life cycle and allows for faster distribution of software upgrades and faster time to market.
Software upgrade is an expensive exercise for an enterprise. Several months of planning and orchestration can go awry due to unforeseen glitches. And in spite of corporate policies and product end of life cycles, legacy software doggedly survives in an enterprise. With Cloud, there is no legacy software and software upgrades are automatic.
Cloud applications are delivered over the Web. This approach greatly revolutionizes the adoption of Cloud.
- Cloud applications are more accessible and easier to use because all the end user needs is a Web browser and an Internet connection. Enterprises can now share the benefits of the software application with a broader user base.
- The software application becomes end user platform agnostic saving precious Development and QA cycles.
- The maturity of Web service models and infrastructure lends itself to the services making them more reliable and robust.
- Web service standards like AJAX, CSS and XML facilitate better user experience, presentation and integration with third party products.
The transition of a software application from an IT asset to an Operations asset means that mature Operations metrics paradigms can now be applied to Software applications. Software problems can no longer be blamed on mysterious end user problems. They can be easily monitored and measured in terms of quantifiable metrics like availability and performance. Customers can use these service metrics to measure their software application providers and demand better service levels through SLAs. Businesses can also use service metrics to measure the productivity of their employees.
Better Software for Less
Software solution customers sometimes use a lower grade of software because of budgetary restrictions or lack of in-house expertise to configure the advanced features of the software. With a Cloud solution, these customers get access to sophisticated features at a lower price and with a simpler interface which can translate into greater efficiency.
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