On-Prem vs Cloud Software and How to Future-Proof Your Business
Elizabeth Allen 
August 22nd, 2023
It’s all moving so fast. As we watch the technological landscape evolve at a rapid pace, businesses are now faced with crucial decisions about what solutions will best serve their company. We’ve spoken at length about the importance of automating your accounts payable process, but deciding to automate is just step one. Once you’ve come to the conclusion that automation is necessary in our current environment, there are a few other questions you have to ask yourself.
On-Premise or Cloud-Based?
While the concept of having full control over your data and workflows as in an on-premise solution seems enticing, modern cloud infrastructure and its promises of scalability, ease-of-access, and flexibility makes the choice not so straightforward. For each solution, there are benefits and drawbacks that need to be considered.
In the end, the name of the game is future-proofing. Executives tend to strategize toward the future, but so often, we lose sight of how the solutions we rely on will exist within that brave new world. The interaction of your solutions and any changes in headcount, location, number of vendors, subsidiaries- this will make of break your company reaching its full potential in shifting climates
“ It’s not just about technology – it’s about the future of the business. The cloud’s offer of scalability and agility is compelling. But we can’t disregard the complex legacy systems that often anchor our operations. What must be at the forefront of this critical decision is futureproofing your business. Embracing AP automation, in whatever form that takes, allows you to optimize processes, reduce errors, and understand your financial operations at a granular level. Regardless of where your data lives, business leaders must pave the way for a nimble, data-driven future using automation.
Automating your AP process is no longer a possibility of the future. It’s the reality of today. It’s where any company needs to live if it strives to succeed in an ever-evolving marketplace of technology. The question is well past “should we automated our accounts payable operation.” The question is now, undoubtably, WHEN we automate, where should we store the information that makes us run. “
“ Automation is a critical tool that we can use. Today, AP automation helps us maximize staff productivity and enables us to adapt to changing business needs. “
In this article, we will dive into what each approach entails, how they compare, and the myriad benefits of each. Walk away with a game plan as to how your organization will approach automating your AP process, ensuring increased efficiency, flexibility, and most important of all, scalability for the future.
TABLE OF CONTENTS
- What is On-Premise Software?
- What is Cloud Software?
- On-Prem vs Cloud Compared
- Key Differences Between On-Premise and Cloud Software
- On-Premise vs. Cloud Software Infographic
- The Benefits of On-Premise Software
- The Benefits of Cloud Software
- Future-Proof Your AP Department with Automation
- Achieve Full Modernization with MHC NorthStar
What is On-Premise Software?
Installed and hosted within an organization’s physical infrastructure, on-premise software is typically housed within data centers or servers that reside within the company’s walls. The organization’s IT department manages, maintains, and controls the software – including executing routine maintenance, troubleshooting issues, and performing upgrades as required.
What is Cloud Software?
Cloud-based AP automation software is hosted and delivered to users through computing infrastructure located in the cloud, managed by the software provider. In this situation, the software provider takes care of the maintenance, troubleshooting, and upgrades that would be performed by the organization itself in a more traditional on-premise software model. With cloud software, AP teams access the software through web browsers or dedicated applications. According to a study by Deloitte, 90% of organizations have already been using cloud-based models for at least three years.
On-Prem vs Cloud in 2023
Which System Sets Your Business Up for Success?
As digital transformation continues to reshape how we live and work, the question arises: which path will best position your business for success in this unprecedented era? Automation is a non-negotiable. It is the only true way to modernize your operations so your business can stay agile. But what solution will give your organization the upper hand as you align your unique needs and with your ultimate goals?
On-Prem vs Cloud Compared
On-premise and cloud-based software does have some overlap when it comes to what they can offer. But there are some differences that could impact this important business decision.
Feature
On-Premise
Cloud-Based
Increased security and compliance
Yes
Yes
Scalability
No
Yes
Data visibility and control
Yes
Yes
Automatic updates
No
Yes
Accessible anywhere
No
Yes
Speedy deployment
No
Yes
Disaster recovery
No
Yes
Integration with ERP
Yes
Yes
Affordability
No
Yes
Feature
On-Premise
Cloud-Based
Increased security and compliance
Yes
Yes
Scalability
No
Yes
Data visibility and control
No
Yes
Automatic updates
No
Yes
Accessible anywhere
No
Yes
Speedy deployment
No
Yes
Disaster recovery
No
Yes
Integration with ERP
Yes
Yes
Affordability
No
Yes
Modernize Your Oracle On-Prem Integration
Key Differences Between On-Premise and Cloud Software
Automation will get you to where your AP team needs to be, but there are some distinct differences between what on-premise and cloud solutions offer. Focusing on these key differences can be the secret to determining which will better serve your company.
Increased Security and Compliance
Although an on-prem solution requires an on-site IT team (or third party vendor) to manage security measures and permissions, having the data stored in-house on the company’s own infrastructure does offer greater control when it comes to data security and compliance. However, cloud software providers do typically utilize strict security and compliance certifications. Highly regulated industries also need to be aware of compliance requirements if they are planning on taking data off-site in a cloud-based model.
Scalability
When your AP automation software is installed on-premises, investments in new hardware and infrastructure is often required when large structural changes happen within the organization. With cloud software, accessibility and functions can be adjusted with the touch of a button, allowing for companies to be more agile as their org chart and operations evolve.
Data visibility and control
Regardless of where the solution is housed, one of the major benefits to automating your AP operations is an increase in visibility and control when it comes to your data. With at-a-glance dashboards, permission-based roles, and approval workflows, your accounts payable team will know the status of every invoice with ease.
Automatic updates
In the case of on-premise software, your organization’s IT department will be responsible for performing an updates, upgrades, or patches to ensure the system is always up-to-date when it comes to the latest features and security enhancements. However, the provider of your cloud software will do this automatically and seamlessly, and usually without any downtime.
Accessible anywhere
That’s the thing about on-premise AP automation software. Your team either needs to be sitting in your office to do their job, or they need to be logged into a costly VPN to allow for off-site usage. One of the major benefits to a cloud-based solution is that users can be sitting anywhere, at any time of the day, and can continue to process invoices and run reports. Due to the fact that your software is hosted on remote servers, all it takes is a device and an internet connection and your workflow does not need to be interrupted.
Speedy deployment
Let’s be honest, oftentimes a decision comes down to how quick you can deploy the new solution while having the least amount of impact on your team. On-premise software tends to be a longer, more drawn-out process as you have to engage several internal and external teams to install and launch the new solution. But cloud-based solutions can be as simple as a few remotely installed files and a flip of a switch.
Disaster Recovery
When the worst happens, you want to feel confident that your data won’t be lost to history. Given the very nature of having your data stored on-site with a on-premise solution, it’s possible to have missed critical backups and patches that will prove catastrophic when things go awry. Cloud-based platforms perform automatic and routine data backup, offer redundancy, and can generally restore data more quickly.
Integration with ERP
With both on-premise and cloud-based models, organizations can integrate their AP automation solution with their existing ERP system. With on-premise software, there is more capacity for customization and control. Cloud software offers increased agility, scalability, and frequent updates.
Affordability
The need for physical installation on local servers and the possibility of additional infrastructure means a larger initial cost when taking your AP operations to an on-premise automation solution. Add in the costs for a licensing contract and the absorbed costs of maintenance by your own IT department, and on-premise software requires a costly initial investment upfront. A cloud-based platform doesn’t have that same upfront cost as you aren’t required to invest in additional IT infrastructure. Along with a subscription-based pricing model, your maintenance is done automatically by the software provider, ensuring that prices stay low and that the software can scale with your company’s needs.
According to Gartner, the annual cost of owning and managing software applications can be as much as four times the cost of the initial purchase. In fact, companies can spend up to 75% of their total IT budget just to maintain and run existing systems and infrastructure.
[Source: Wired]
The Benefits of On-Premise Software
Cloud-based AP automation software offers companies a whole new world of benefits that can significantly improve overall business operations. Streamline your workflows and drive efficiency by leveraging the straightforward function of automation software hosted from the cloud. In fact, Gartner estimates that 85% of business will have adopted a cloud-first strategy by 2025. Here are some key advantages to implementing cloud-based software.
No Internet Access Required
Locating your software on your own internal servers and requiring user access via directly installed applications on individual desktops, companies don’t struggle to continue their payment process in the event of internet disruptions.
No Recurring Monthly Costs
With contracted licensing models, companies do not have to worry about receiving a monthly bill from their on-premise software provider. Most costs occur upfront and additional charges only occur during major upgrades or contract term changes.
Greater Security
Data housed off-site is more at risk of penetration and theft by nefarious third parties. With an on-premise solution, only internal employees with pre-defined permissions have access to your most important data.
Infrastructure Control
Relying solely on your IT department and having your software housed on your company’s internal servers, users of on-premise AP automation software have more control over the timing of performing actions like maintenance and upgrades.
Familiarity for ERPs
On-prem solutions have been available for decades, giving them a clear advantage when it comes to existing ERP integration plans. And there are obvious opportunities for current on-prem customers to modernize their existing processes with just a few small tweaks.
AP AUTOMATION DEMO
The Benefits of Cloud Software
Cloud-based AP automation software offers companies a whole new world of benefits that can significantly improve overall business operations. Streamline your workflows and drive efficiency by leveraging the straightforward function of automation software hosted from the cloud. Here are some key advantages to implementing cloud-based software.
Supports Business Continuity
The centralized location of data offered with a cloud-hosted solution makes the capturing of data and generation of analytics possible, giving users immediate access to vital information that will aid in future planning.
Eliminates IT Costs and Intervention
Without bearing the responsibility for the maintenance and upgrades of on-site infrastructure, customers are no longer burdened with a dependence on IT resources, freeing both valuable technical and administrative resources up for more value-added pursuits.
Powerful Analytics
Without the need for the massive amounts of energy typically required to power large data centers, SaaS solutions encourage more sustainable, green practices within an organization while reducing the overhead costs associated with powering on-site infrastructure.
Improved Scalability
The inherent scalability of cloud-hosted applications allows an organization to flex with their business needs, granting additional users at no additional cost and upgraded functionality with virtually no lead time required.
Enhanced Data Security
Constant updates to ensure SOC 2 Type II compliance ensures that performance is diligently maintained and ever-evolving security standards are met, reducing stress and energy spent on upholding stringent requirements.
Ease of Adoption
A flexible, user-friendly interface reduces the learning curve typically associated with installed applications and easy mobile accessibility allows customers to do their work from anywhere on the planet without complication or confusion.
Reduced Implementation Time
Given the nature of cloud automation software, your organization can go from planning to go-live in no time flat. Offering limited or zero downtime, companies can feel confident that implementation won’t cause additional headaches.
Environmentally Friendly
When all crucial data is stored in the cloud, an organization experiences the advantage of being able to do business regardless of location, while eradicating the risk of permanently losing any valuable information.
No Large Up-Front Costs
The subscription-based pricing models typically used for cloud-based offerings coupled with the lack of additional physical infrastructure needs means a more affordable investment.
Future-Proof Your AP Department with Automation
“ Whether you’re navigating the cloud or grounded in on-premises solutions, one truth remains: automation is the way to go. Increasing competition, changing user expectations on how work gets done, and scrutiny on profitability are top reasons organizations are leveraging automation solutions to become more efficient, agile, and resilient. “
“ Automation isn’t just a convenience; it’s the way modern business runs. It empowers us to transcend logistically that which previously limited us, while offering improved financial health for the company as a whole. “
The past few years have taught most companies that being prepared for the future is the only way to ensure organizational success. Whether it comes in the form of a merger and acquisition, a major structure overhaul, a global pandemic, or economic uncertainty, implementing an automation solution is a sure-fire way of future-proofing. To stay ahead of what the world throws at your company, there are a few ways to begin your journey to automation.
1. Stay On-Prem
Moving to the cloud is an overwhelming concept- considering the time commitment and the monetary investment that often come with this particular decision. Many companies are retaining their on-premise software with future plans to move to the cloud. McKinsey & Company reports that it’s respondents expect to move 90-100% of their operations to the cloud within the next three years.
2. On-Prem with Plans to Move to the Cloud
Moving to the cloud is an overwhelming concept- considering the time commitment and the monetary investment that often come with this particular decision. Many companies are retaining their on-premise software with future plans to move to the cloud.
3. Begin Your Journey to the Cloud Now
If you want your company to remain competitive in this current environment, a speedy move to the cloud is one of the best things you can do to ensure agility, scalability, and flexibility in meeting your organization’s needs at the drop of a dime. And according to G2, over a third of companies plan to migrate from their legacy enterprise system to a cloud-based solution in 2023. Organizations would do well to be following their strategic lead.
Achieve Full Modernization with MHC NorthStar
MHC’s born-in-the-cloud solution is the easy and effective way to graduate your accounts payable processes to the cloud. Handle a higher volume of invoices and payments without having to make drastic investments in time, money, and human power. With features like intelligent invoice capture, pre-build AP workflows, and touchless general ledger coding, you’ll wonder why you didn’t move to the cloud sooner.
“ Our purpose at MHC is to make people’s work lives simpler. We remain committed to delivering automation solutions that increase operational efficiency while elevating experiences for the people getting work done at their organizations each day. It is exciting to partner with a growing number of customers ready to tackle the next stage of their digital transformation. “
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