SaaS vs. On-premise Accounting Software: 7 Things You Need to Know before Choosing

Adopting a SaaS (cloud based) accounting software solition is definitely a good way to lower operating cost of your company. However. using such a service also has some risks involved and may not fit well with some business models. In this article we’ll guide you towards a model that will work best for your company: SaaS or on-premise. Here are seven factors you should take into consideration before you invest in any particular software.

1. Read between the lines when computing long-term costs

Don’t take the promise of both SaaS and on-premise vendors. Look beyond five years to find out which really costs more. Although SaaS will be charging a monthly fee forever (until you unsubscribe), on-premise has recurring costs, too. Consider software and hardware upgrades and updates over the course of years.  Technical staff salary, backup, recovery and security services can easily add up to the on-premise operating costs. Run your numbers carefully, taking into account all possible factors, and see which between the two is cheaper in the long run.

2. List the pros and cons for both services

To easily pinpoint which service provides a better solution, list all pros and cons side by side. Remember, the advantages and disadvantages are relative to your business (for instance, hiring a technical staff maybe an advantage for a large enterprise but a disadvantage for a small business).  This way, you’re making a multi-tiered process to help you choose the better product. On top of this list, ask yourself: Is there a provider in either category that I can trust? Choose your best option.

3. Go beyond cost

Cost is important, but it’s not the only critical element in your decision. Take into account customization, control, compliance, security, backup and restore, etc. These factors will impact on how you run your business so make sure you get the right fit. You might imagine putting your data in the cloud may post some risk; but also remember that big cloud companies have better security, backup/restore infrastructure, and protection from physical hazards like fire, earthquake, and flood than your own server, which is likely to be just sitting in one corner of your small office and at more risk from hacks, fire, and theft.

4. Know how much computing power and storage you need

If your computing power (to run the systems) and storage (to save your data) demand is low, so is your capital for an on-premise infrastructure. Conversely, these costs will shoot up as you demand for more power and storage, making SaaS a better option. If you’re not aware of your need, don’t buy either, yet. These factors are critical to your buying decision so think hard about them.

Read more:  Small Business Bookkeeping Software Online

5. Ask for a free trial or demo

Nothing beats using the actual product, whether SaaS or on-premise, and getting a feel of it. SaaS can easily provide a free trial because it can deploy installation online; while on-premise may require a visit to your office and you’re likely to be given just a demo instead of an actual trial.

6. Check compatibility with other productivity tools

Generally, on-premise is best for specialized apps that host sensitive records and large data management, while SaaS is best to foster collaboration and productivity across departments and even branches. Will you be using other apps parallel to the accounting software? Make sure the software is compatible with your existing tools.

7. Vendor relationship difference between SaaS and on-premise

Your communication with on-premise vendors usually consists of the sales pitch, purchase, software installation, and collection. Then the vendor disappears unless it sells you another product (or you approach it for another product). On the other hand, you’ll be constantly in touch with a SaaS vendor since you’re using its system every day of each month that you’re subscribed to it. It’s like having an outsourced agency integrated in your business operations.

Keep in mind that aside from deployment, there are other different types of accounting software based on features or industry-specific vs. general accounting software solution.


Choosing between SaaS and on-premise accounting software requires a deeper and contextual analysis of your business. Remember, price is a factor but it’s not the only one, and sometimes, other factors count more. The first step is to understand the needs of your business. Only then can you make a logical decision which to choose: SaaS or on-premise.

Category: Accounting Software

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