Software Deployment – On-Premises and Cloud

There are several different software deployment options when implementing ERP software. About a decade ago, on-premises was the only option, but nowadays, cloud software is the more popular choice – especially for SMBs. But what about the difference between single-tenant and multi-tenant architecture? What about SaaS and hosted software? Unfortunately, since many software vendors tend to use deployment terminology differently, it's important that you fully understand each option to make sure you're making the right choice for your business. We've outlined some general descriptions below.


On-premises refers to software that you manage on your equipment. This means that your business is responsible for purchasing the necessary server equipment and hardware, configuring the server environment to run the appropriate software and programs, installing those systems and programs and then managing it all going forward. This includes the management of security, back-ups and data privacy. If you run on-premises software, you will need to have either an internal team of dedicated IT staff to manage the system or you will have to hire an outside firm to do so. Another requirement of on-premises based software deployments is having the physical space to store the hardware and servers and to protect this equipment with the proper cooling systems, alarms and fire suppression systems.

Cloud Software

Cloud software encompasses a variety of different options, however, all cloud software is designed so that users connect over the internet and pay an ongoing fee to use the system (referred to as license fees). With cloud software, the software vendor is responsible for managing the physical hardware and servers.


SaaS or “software as a service” is a part of cloud software in that it refers to a software solution that is managed on a vendor’s equipment and then you, the customer, pay for access. SaaS models typically charge a monthly or annual fee for access to the software (the software licenses). Unlike on-premises, running a SaaS solution means that the software vendor is responsible for managing the physical hardware and servers that the software resides on. However, depending on the software vendor, they may own the equipment themselves, they might lease equipment from another company, or the software vendor may be using an existing cloud-infrastructure (such as Azure or Amazon). The benefit of SaaS-based solutions is that you don’t need to worry about internally managing any of the physical hardware or servers. This also means you don’t have to worry about having the right people in-house to manage the IT side of things as it relates to the server and its applications.


Hosted is another way to describe a SaaS-based solution, where the software is hosted on the vendor’s servers.

Within cloud software, you can have either a multi-tenant architecture or single-tenant architecture.


Multi-tenant architecture is what many software vendors refer to as “the true cloud”, but as we just learnt, there are many different versions of cloud-based software. Multi-tenant architecture allows one instance of the software to serve multiple customers at the same time. A good example of a multi-tenant architecture system is Facebook. One version of Facebook is available to all customers and each customer gets upgraded at the same time when Facebook releases a new version of the software. Multi-tenant architecture tends to bring down the cost of software license fees, however, it limits your ability to customize the system.


Single-tenant architecture, therefore, is the opposite and each customer gets a different instance of the software. Although for the most part, each instance will provide much of the same functionality, this allows the customer to have control over when they upgrade the system and allows them the option to customize their version of the system. Blue Link ERP is an example of a single-tenant cloud-based solution.


IaaS or “infrastructure as a service” refers to companies that lease out hardware and server equipment for cloud-based applications. This means that the software vendor simply pays another company to manage the physical hardware and all the associated security. The software vendor then manages the software and applications they install on this equipment. While the software vendor in this situation will take care of any IT maintenance, back-ups and security of the software, the IaaS company provides the physical space to store the equipment and covers the cost of protecting it with proper alarm systems, cooling systems, fire suppression, back-up generators, etc.

Open Source is another software deployment option where anyone has access to the source code for developing a custom system at no charge.

To further complicate matters, some software vendors offer hybrid versions of their software. This might mean that the software is managed in the cloud, but data is stored locally, or certain components of the software and data are stored locally.

As you can see, there are many different versions of cloud-based software and terminology to support different deployment options. Make sure you ask the appropriate questions when vetting software vendors to fully understand their product offering.