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Cloud vs. On-premise Software: 8 Questions You Need to Ask Your Vendors

Cloud computing continues to rise in importance, with an increase from 41% of total IT spend today to 63% in the next 18 months, according to IDG’s Cloud Computing research. IDG’s report also noted that 60% of IT decision-makers credit cloud capabilities with helping their organization to achieve sustainable revenue growth over the last 12 months. 

This rise comes at the expense of on-premise applications, which are declining in market share. Many CIO’s have issued a “cloud-only mandate” for their organizations, triggering a complete reshuffle of IT departments and their systems landscape. This mandate is driven by the widely recognized business benefits provided by pure cloud solutions such as:

  • Reduced IT overhead costs
  • Enhanced security
  • Ongoing appreciation of solutions due to high frequency of upgrades
  • Enhanced collaboration
  • A clear and straightforward cost-benefit model

On-premise vs. cloud software comparison

Basically, the difference between on-premise and cloud software is where they live. On-premise software is installed on your local business computers and servers. Cloud software is hosted on an offsite cloud server and accessed by your staff via a web browser. Clearly, the level of ownership differs but so does the pricing/cost and the responsibilities your business has to undertake. Cloud software is usually purchased through a subscription that also covers training, support and updates. On-premise software is usually purchased with an upfront perpetual license fee and leaves your company with the responsibility for training, support, and updates.

What to consider when evaluating cloud-based software

If you’re one of the many organizations evaluating software vendors to implement your IT strategy, ask these eight key questions before entrusting vendors with your data.

1. Are you ISO 27001 certified and fully accountable for security?

True multi-tenant cloud vendors will answer yes on both accounts. The ISO certification indicates they’ve met rigorous standards for security, which should be essential to your selection criteria. In terms of the vendor taking on accountability for security, it’s a win-win for the vendor and the customer. Security investments in a multi-tenant infrastructure benefit every customer, and this high ROI leads to larger and more frequent investments by the vendor. So when new innovations in security become available, your software vendor is more inclined to make those investments, and as a result, customers benefit.

2. How quickly are you able to address defects?

Data security is not the only area where the multi-tenant model works to your benefit. The software vendor has greater visibility to how customers are using the software which improves quality control. If the software has a defect, it can be detected and fixed before it impacts your business. This visibility makes the vendor smarter and more proactive.

3. How many versions of software are you currently supporting?

The best answer is one, as this will give you the fastest pace of innovation and indicates focus. Vendors juggling the management of multiple software versions adds risk, especially if one version is not up to par with industry standards (for example, lack of support of the latest browser technology).

4. How often do you issue new software releases? What impact can we expect during the upgrade process?

This question exposes any hidden costs or potential disruption around releases, as well as indicating the vendor’s pace of innovation. The best cloud solutions offer upgrades and releases on a regular basis with limited customer impact.

5. How many different software delivery approaches do you have?

Just like with software versions, the best answer is one. Consider it a red flag if a vendor has on-premise, private cloud, and multi-tenant cloud offerings. Again - this shows a lack of focus, strains the vendor’s resources, and may be an indicator of much larger issues.

6. What customer use metrics do you track?

Vendors committed to continuous improvement need to be tracking metrics and performance, as well as system usage to ensure sufficient capacity at all times.

7. Where is your software hosted (i.e., who owns and manages the data centers)?

Some of the industry’s top hosting providers include AWS, Microsoft Azure, Google Cloud and NTT data centers. Hosting elsewhere may create additional security risks. Don’t settle for unreliable host offerings.

8. Do you provide transparency into service status?

How will you, the customer, know if the system is up, down or sideways? Pure cloud vendors will often provide a public site that details service status and will report any disruptions to the service. Here is an example: trust.veeva.com

Not All Software Companies Are the Same

Software companies are not all the same and your ultimate satisfaction with the solution you choose can depend significantly on the quality, dependability, and agility of your chosen vendor. Approach software evaluation as if you are interviewing a potential employee. Look at their past, their skills, and their references. Also check for a culture fit (open API, fast, scalable, flexible, etc) and consider if their goals seem likely to align with your company’s going forward.

For more information and additional questions to consider when evaluating a cloud-based software vendor, please refer to the Expert’s Guide to Evaluating Software.

Then contact us to learn about Veeva QualityOne — an intuitive, easy-to-use cloud-based quality management and document control solution committed to helping businesses streamline operations and build customer loyalty through quality.

Geert Van Kempen

Posted by Geert Van Kempen

Geert is Head of Veeva's Food & Beverage Strategy. Before joining Veeva, Geert worked at Unilever - one of the world’s largest consumer goods companies – in the corporate Quality group, where he worked for the Foods & Refreshments global Quality team, and led Unilever's digital Quality transformation project, in partnership with Veeva.