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Should Your Manufacturing Software be Cloud vs. On-Premise?

Product Devin Culham | April 19, 2023 | 5 min read

In this article, explore the pros and cons of cloud-based vs. on-premise manufacturing software.

It’s an age-old question – cloud-based or on-premise software? Well, perhaps not. Still, more and more manufacturing organizations are weighing the benefits and drawbacks of using cloud-based vs. on-premise software in their production processes.

The decision to use on-premise or cloud-based software is going to be personal for each individual organization. In this article, we’ll discuss the pros and cons of on-premise and cloud-based software to provide you with the information you need to consider before your next manufacturing software purchase.

What’s the Difference Between Cloud vs. On-Premise Software?

Cloud and on-premise manufacturing software refer to the environment where the software network is managed and hosted. As the name suggests, on-premise software is typically managed on local servers and built on an organization's existing devices and IT infrastructure.

Cloud-based software, on the other hand, is hosted on an external web hosting platform and is typically managed by a third-party vendor. Unlike on-premise hosting, cloud-based software can be accessed from any device or location as long as users log in with approved credentials.

Does Cloud vs. On-Premise Matter in Manufacturing Software?

The simple answer is: it can! Although there are several factors to consider when selecting cloud vs. on-premise software, the choice will primarily depend on the size of the company and its IT resources – as well as the level of security necessary to manage and perform manufacturing processes.

For organizations with stringent security protocols, on-premise is worth the additional investment and maintenance. However, for small and mid-sized companies, cloud-based or dedicated cloud servers provide ample security and scalability at a fraction of the cost.

Cloud vs. On-Premise Manufacturing Software: Pros and Cons

So, now that you understand the cloud and on-premise software better, let’s discuss which model is more suitable for your manufacturing business.

First up, on-premise software.

large room with servers

Pros and Cons of On-Premise Software

Pro: Enhanced Security and Control

Undoubtedly, the greatest benefit of hosting manufacturing software on-premise is the enhanced security and control organizations have over their own data and users. Especially for large organizations like original equipment manufacturers that own intellectual property (IP) in critical industries like automotive, defense, and oil and gas, on-premise software isn’t just a requirement – it’s a necessity.

Con: On-premise Software Requires Dedicated Physical Space

Unlike cloud-based software, on-premise software, as the name suggests, requires on-site servers and IT infrastructure. Depending on how much data and storage an organization needs to perform its manufacturing activities, servers can require a small room or a full building floor. In addition, because servers require a climate-controlled environment to operate, companies may need to renovate or rehabilitate existing office space.

As many companies downsized their office locations to accommodate COVID-era work-from-home policies, it might only be the best long-term investment if servers are already in place.

Pro: On-Premise Can Process High Volume of Data

If you’ve ever been stuck on a screen waiting for the page to load, you’ve experienced latency. Latency is the time it takes for devices like computers, phones, and tablets to send and receive data from one server to another. Because on-premise software is ‘hardwired in’ and isn’t sent over a wireless network, on-premise software can process exceptionally high volumes of data.

For companies that use manufacturing software to manage and produce large quantities of parts, latency can cause production disruptions, resulting in decreased output or quality. Although latency doesn’t occur frequently, with cloud-based software, operational downtime due to latency can impact a company’s bottom line.

Con: On-Premise Software Isn’t Disaster Resistant

Perhaps the Achilles heel of on-premise software isn’t the cost or maintenance to operation, which are justifiable expenses. No, on-premise software’s biggest, but not indefensible, weakness is it’s less resistant to disaster. In the unlikely case of bad weather, natural disasters, or disruptions to civil infrastructure, on-premise software can become vulnerable. Destruction of servers or equipment without a contingency plan can result in lost data and operational downtime.

graphic representing cloud-based communciation

Pros and Cons of Cloud-Based Software

Pro: Cloud-based software typically has shorter implementation timelines

If you’re looking to get up and running quickly with new software, cloud-based manufacturing software is the solution for you. Because many cloud-based software solutions are ‘off-the-shelf,’ typically require much shorter implementation timelines. Whereas on-premise software requires more input and buy-in from an organization's CTO and IT departments to ensure that the software can integrate into existing IT infrastructure, it requires more coordination from multiple teams and shareholders, leading to implementation delays.

For cloud-based software, it’s not uncommon to start using new solutions within months, or even weeks, after signing a software agreement. On-premise implementation, however, can stretch into months or even a year after the initial deal is signed.

Con: Most cloud-based software vendors offer limited opportunities for customization

Shorter implementation timelines often translate to fewer opportunities for customization. Although this isn’t a hard and fast rule, it’s common to see manufacturing organizations change their processes to fit their software. At 3YOURMIND, we’re proud to offer customization capabilities for both on-premise and cloud-based customers so that organizations are in the driver’s seat of their own software adoption.

Con: Cloud-based software with existing software solutions can be more challenging.

On-premise and cloud-based manufacturing software can experience challenges integrating with other software vendors. Although open-API capabilities can streamline this process for cloud-based software, IT professionals for on-premise installations typically have more advanced knowledge of their organizations' IT architecture. They can diagnose whether a new software integrates easily with existing tools before implementation.

Pro: Cloud-based software is scalable and grows with your operations.

Hosting data on on-premise servers means there is a ceiling to how much data can be transmitted and stored. Although it is possible to add servers for this purpose, building more space to host servers requires significant time, physical space, and financial resources.

Cloud-based software, on the other hand, can scale up quickly and with little cost because servers are hosted off-site. It's often as simple as upgrading your subscription for the data storage your business requires.

Your Choice: On-Premises or Cloud Installation

Whether you decide to implement manufacturing software on-premise or via the cloud, 3YOURMIND is a partner you can trust to be with you every step of the way.

3YOURMIND has extensive experience integrating into complex, on-premise installations customized to the exact requirements of your organization. We take security seriously and have experience following the Department of Defense's security technical implementation guides (STIGs) for customers like the U.S. Navy and Phillips Corps. Federal Division.

We also understand the importance of scalability. We can deploy our software in our secure shared SaaS infrastructure as a dedicated cloud instance that can grow with your operations. Our cloud-based capabilities is just one reason why customers like JSSB and Arkema choose 3YOURMIND. 

In addition, we maintain automatic deployments in each environment to provide regular software and security updates so that on-premise and cloud-based customers stay updated with the latest features.

Read more about our latest software updates, or request a demo.

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