eCommerce Glossary
This e-commerce glossary features over 250 essential terms every online seller should know to succeed in digital commerce.
On-premises refers to a software deployment model where applications and systems are installed, managed, and operated directly within a company’s own physical infrastructure, such as servers and data centers, rather than being hosted off-site or in the cloud.
How Does On-Premises Work?
- Installation and Management: This software is installed on hardware and servers that are located within the organization’s premises. This model requires the organization to handle all aspects of software installation, configuration, maintenance, and upgrades internally.
- Licensing and Ownership: Organizations typically acquire on-premises software through a one-time license purchase or a perpetual licensing agreement. The software is fully owned and controlled by the organization, which also bears responsibility for its operation and security.
- Resource Utilization: Those solutions rely on the organization’s existing IT infrastructure, including servers, storage, and networking equipment. The organization must ensure that its infrastructure meets the software’s requirements.
Key Benefits of On-Premises
- Control and Customization: Provides full control over software configuration, data management, and system integration, allowing for extensive customization to meet specific business needs.
- Data Security: Offers a higher level of control over data security and compliance since all data and applications are hosted within the organization’s own facilities.
- Integration with Existing Systems: Facilitates seamless integration with other on-premises systems and applications, leveraging existing infrastructure and processes.
Challenges of On-Premises
- High Initial Costs: Requires significant upfront investment in hardware, software licenses, and infrastructure, as well as ongoing maintenance and support costs.
- Scalability and Upgrades: Scaling the system or upgrading the software can be more complex and costly compared to cloud-based solutions, as it involves physical hardware changes and manual updates.
- Resource Management: Places the responsibility for IT management, including system administration, security, and disaster recovery, on the organization’s internal IT team.
Examples:
- Enterprise Resource Planning (ERP) Systems: Many large organizations use on-premises ERP systems for managing business processes and data within their own data centers.
- Customer Relationship Management (CRM) Software: Some companies deploy on-premises CRM solutions to maintain tight control over customer data and integration with internal systems.
On-premises software deployment provides organizations with complete control over their IT environment and data management, making it suitable for businesses with specific security, compliance, or customization needs. However, it requires substantial investment in infrastructure and ongoing management.