Cloud computing and on-premise solutions are setting the technological course for modern logistics, with each model offering its own unique advantages and disadvantages. In this post, we will take an in-depth look at the differences, benefits, and challenges of both approaches to help you make an informed decision for your logistics company. Let’s dive into the fascinating world of cloud computing and on-premise in logistics.
Who still buys software in the 21st century? As digitalization advances, responsibility for IT topics is increasingly shifting toward specialized departments. As a result, logistics managers are now frequently faced with the question of which IT solution is best suited for their company. Numerous factors influence this decision: Can the software support and improve workflows? Is the software compatible with other systems? Furthermore, financial considerations are not the only deciding factor. The most important question before any new acquisition, however, is: Should the software be purchased or simply rented?
Essentially, since the rise of cloud technologies, there have been two options: on-premise (buying the software) and SaaS (Software as a Service). On-premise refers to hosting the software on-site—an integration project where the software is purchased—while with SaaS, the data is hosted by the software provider and rented via the cloud. Both of these models have pros and cons that must be weighed before making a purchase.
On-premise at a glance
If you decide to roll out software directly at your own location, the common term is on-premise, or "on-prem" for short. Before modern cloud solutions, this was the standard approach for introducing new software into a company. The internal IT department would prepare the hardware infrastructure required for the software and ultimately manage the new system. This was also reflected in the company's personnel costs.
The advantages of on-premise
✔ Control over the technical infrastructure
✔ Usually more cost-effective in the long term, provided the necessary technical requirements are met
The disadvantages of on-premise
✘ In-house maintenance is extremely time-consuming and resource-intensive
✘ Requires a high level of technical expertise from IT staff
✘ Traditional investment risk
✘ Ensuring availability and data security involves high costs (updates, the latest versions, and support usually have to be purchased separately)
An overview of SaaS and cloud services
The evolution continues: About 20 years ago, software companies and third-party providers began offering hosting via external servers. While server hardware itself had become more affordable, the need for personnel to maintain the servers remained an additional expense.
Cloud services are a subset of hosting services, which include the following three categories:
- Software as a Service (SaaS)
- Infrastructure as a Service (IaaS)
- Platform as a Service (PaaS)
SaaS is a software hosting model in which application software and databases are provided by a third-party vendor. Customers can access all data via a web browser—essentially renting the software. The key feature of SaaS is that the software is licensed on a subscription basis and hosted centrally, which is why it is also known as "on-demand software."
Simply put, cloud computing can be understood as the delivery of computing services over the internet (the "cloud"). Although there was initially a prejudice that cloud systems were insecure, trust in SaaS services has grown as security requirements have also increased.
Benefits of cloud services/SaaS
✔ No upfront investment costs
✔ Speed through on-demand applications
✔ Greater flexibility and scalability: you can upgrade at any time and won't be held back by long contract terms as your business grows
✔ No additional IT staff hours required
✔ Reliable data backup, recovery, and customer support
Drawbacks of cloud services/SaaS
✘ High dependency on providers (requires trust)
SaaS or on-premise for your business? Which is better?
There is no one-size-fits-all solution for every company.
Which model is better for your business depends primarily on your specific requirements and available resources. On-premise is still considered the standard, especially in large enterprises. Small and medium-sized businesses, however, can benefit significantly from the flexibility and cost control offered by SaaS.
At TradeLink, we have identified the core problem in the logistics industry: there is no coordination between all supply chain stakeholders. On average, every company is connected to 200 other businesses—contract logistics partners, freight forwarders, customers, etc.—and must coordinate with them. On top of that, there is the internal coordination between purchasing, production, sales, and logistics.
Naturally, this problem cannot be solved with a static software solution, which is why we strive to facilitate information exchange between all parties via the cloud. By using our tool, our users can reduce truck idle times and wait times by an average of 60%. Since our tool replaces time-consuming processes involving phone calls, emails, and Excel, it is possible to save thousands of additional employee hours.
Would you like to learn more about what you can achieve with TradeLink? Book your personal demo now and let one of our logistics experts guide you through the tool!
