On-Premise vs Cloud Software For Local Governments
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On-Premise vs Cloud Software For Local Governments

Learn more about the difference between On-premise and Cloud solutions.
On-Premise vs Cloud Software For Local Governments

Fiduciary Duties

You’ve been tasked with sourcing and purchasing the best municipal software for your local government or special district. You know what features you need to make sure the job is done right. However, the options you’re looking at may have the On-premise vs Cloud-hosted difference.

You may not be familiar with the difference or lean on someone from IT to help with making the decision. The goal of this guide is to provide you with a comparison between the two. At FMS, we’ve made the choice to offer our products as On-premise solutions. At the end of the day, your job is to weigh the choices and make the choice that’s best for your operation.

What is On-premise vs Cloud

The primary difference between On-Premise and Cloud solutions is where the software actually “lives”. With an On-premise solution, the software is installed on a server that your operation owns and operates. With a Cloud solution, the software resides on the vendor’s servers and you access it through a web browser.

On-premise solutions have been around for a long time. This doesn’t mean that it’s an old-fashioned solution. Its tenure is due to the reliability and control it provides. On the flip side, Cloud solutions are new and are being pushed by many of the big technology companies like Microsoft and Google since they’re the ones that sell cloud storage space.

Customization

When it comes to Fund Accounting, Payroll, or Utility Billing software, one size fits all rarely works. Having a solution that can be tailored to an organization’s unique needs can help adoption and the benefits of new software realized more quickly.

With FMS, our products can meet those customization needs while with many cloud offerings, you’re stuck with what they demoed.

Whether it’s a required process in your jurisdiction, a special piece of equipment that helps you get the job done, or something you simply want done a certain way; having software that can be easily modified to accommodate those requests can be a huge advantage.

Ownership

In a day where people subscribe to more services than ever, it begs the question: “What do you actually own?”

With On-premise solutions, you own the software, the hardware, and most importantly, the data. Cloud solutions are subscription based. Software and hardware aren’t owned and data ownership is typically uncertain.

While that DVD collection might not be very useful now, there’s a big difference between owning a DVD collection and owning the data behind Fund Accounting, Payroll, and Utility Billing software. It’s important to make sure you own what you’re paying for and that you can export that data out if you need to change providers. With cloud solutions, once you are no longer a customer, it’s nearly impossible to gain access to the data.

Products purchased at FMS are owned outright and can be used in perpetuity

Security

Ransomware, phishing, social engineering, and other forms of hacking have increased tremendously. A report by McAfee estimates that cyber crime costs the world economy more than $1 trillion per year. As a result, ensuring your data is protected must be considered.

With On-premise solutions, you can set what security you want in place and can even increase that security after everything is setup. A Cloud solution means you will be using whatever security the vendor provides.

As a result, an On-premise solution provides you the ability to create a more secure environment for your organization.

Cost

Any responsible leader has a duty to make sure they’re getting the most long-term value for their money. Multi-year cost comparisons as well as considering capital expenditure (CapEx) benefits must be considered.

On-premise typically has a higher up-front cost due to purchasing an ownership software license as well as the hardware costs that may be required. With Cloud options, the cost is in the form of a subscription that is cheaper up front, but adds-up over time.

Making a large software purchase such as one with FMS can be classified as a capital expenditure while cloud options are operating expenditures (OpEx).

There are many advantages to having it classified as a CapEx such as it appearing on your balance sheet as opposed to your income statement and being able to depreciate/amortize the purchase compared to no depreciation.When time is considered, On-premise and cloud solutions are very close in total cost.

Conclusion

The four main factors to consider when comparing On-premise vs Cloud solutions are customization, ownership, security, and cost. We’ve chosen to provide our solution as an On-premise solution because of the benefits outlined and think they’re non-negotiable for Fund Accounting, Payroll, and Utility Billing solutions.

Software for local governments, whether that's a borough, township, special district, or city, have unique expectations and requirements. Making sure you're getting the best solution that meets all your needs is paramount.