On-premise or cloud: which one is better for your e-commerce platform?

Cloud or on-premise? This question arises when you have to decide on a shop system. One thing is clear: the cloud business is booming! Even the initially biggest fears, such as the loss of control over costs and own data, are gradually decreasing. The reason for this is that the providers of these cloud solutions have of course also further developed their products and can now increasingly convince with high security standards. But are cloud-based e-commerce platforms really the better choice? In order to simplify the decision for you, we will examine both on-premise shop systems and cloud-based solutions from both sides in this article. First and foremost, however, we need to clarify what the two terms actually mean.

What is meant by on-premise and cloud?

The question of whether the new shop system should be on-premise or cloud-based is essentially about how the software is made available to the company's employees. On-premise means something like "on site" or "local" in German and accordingly stands for the fact that the e-commerce platform must be installed on your own servers or in the cloud you set up yourself. In contrast, with a cloud shop system, the software and IT infrastructure are operated at an external IT service provider and used by the customer as a service.

Basically, then, a distinction is made between a local, self-managed software version and decentralized hosting. To help you decide, we will now show you the advantages and disadvantages of both variants. Let's start with on-premise.

What are the strengths and weaknesses of on-premise shop systems?

"Never change a running system" is probably still the motto of many companies. In some cases, they have simply become accustomed to the program over decades and have never had any problems with it. The clear advantage here lies in the ownership of the software: Once you have purchased the product, you can use the software indefinitely. As a rule, "only" the one-time purchase fee is incurred. However, the initial cost is often a major hurdle, especially for small and medium-sized companies - for them it is easier to pay the usage fees in the form of a monthly subscription. In addition, it is precisely in the corporate environment that licenses are used. This means that the shop system cannot be used by an unlimited number of employees. Therefore, in many cases, separate licenses have to be purchased. In addition, independent maintenance is also associated with costs. On-premise solutions are therefore not as cheap as you might think at first.

Good software is constantly updated: Updates extend a program's functionality, improve stability or close security gaps. These updates also require users to install them regularly, which means extra work. Installing updates and bug fixes can be a not inconsiderable effort, especially in larger companies. In addition, support services are also usually limited. Some software vendors have at some point stopped developing the old program and instead moved on to new products. In this case, one is faced with two options: You can continue to use the old version and risk your online store becoming obsolete after a while, or you can invest in a new product.

Another advantage of on-premise store systems that should not be neglected is that all data remains in the hands of the user. While cloud solutions require transferring information to a remote server in the data center, with on-premise e-commerce platforms you keep all your data yourself - unless you opt for cloud storage.

In summary, these are the strengths and weaknesses of on-prem solutions:

What are the strengths and weaknesses of cloud-based shop systems?

With cloud computing, online store operators now have further options. Instead of buying the corresponding software, installing it on the PC and using it, they can also opt for a subscription.

Manufacturers host the e-commerce platform software in data centers and provide users with access. The user's own PC accesses online via the web browser or a previously installed client, while the actual computing power takes place in an external data center.

The clear advantage is that the hardware is constantly maintained by specialist personnel and the software is also always up to date without your intervention. You therefore do not have to worry about independent updates. Since the software is location-independent, you can access the program from anywhere.

Professional software can be expensive. On-premise solutions are often paid for by a one-time purchase, but such a large investment is not always feasible, especially for smaller companies and founders. What's more, as the business grows and demand increases, the program may no longer meet requirements. With cloud store system providers, you can usually choose between a monthly or annual payment and thus have the option of switching to a different product or adding additional features and employee access at a favorable price.

However, the fact that you have to hand over control to the provider can be problematic. Because if the latter can or wants to discontinue the offer or pause the maintenance work for any reason, this can have a negative impact on your shop.

All in all, the advantages and disadvantages of cloud-based e-commerce platforms can be summarized as follows:

How should online shop operators decide?

As you can see, both on-premise solutions and cloud computing models have their advantages and disadvantages. However, the trend is clearly towards the cloud, as the advantages outweigh the disadvantages for most companies - regardless of their size and/or industry. The fact that the maintenance effort is reduced, initial costs are saved and modern software can be used at any time offers greater added value today than the fact that a solution can actually be called one's own. With Shopify and Shopify Plus, companies have a cloud-based commerce platform at their disposal. With it, they enjoy intuitive store management that can be controlled quickly and easily even from a smartphone.

Conclusion

The considerations of on-premise versus cloud shop systems suggest that there is no clear answer to the question of what is generally the better choice. Both solutions have their advantages and disadvantages. So you should consider your individual needs. Overall, on-premise solutions offer more security, but also require significantly more effort. Cloud software, on the other hand, gives you and your employees the most flexibility and is also cheaper to buy. How you decide ultimately depends on the corporate strategy.