When choosing resource planning software, it is not just about features. Companies must also decide how and where the application is to be operated. Cloud, external hosting and on-premises solutions differ in terms of, amongst other things, IT overhead, control, integration, updates and cost structure.
No single business model is universally the best. A company with a small in-house IT department may have different requirements to a mechanical engineering firm with numerous local systems or a corporate group with binding specifications for infrastructure and data protection.
This decision-making guide highlights the key differences and the questions businesses should consider before choosing a business structure.
What do ‘cloud’, ‘hosting’ and ‘on-premises’ mean?
Software providers do not always use these terms consistently. Therefore, when considering a specific offer, attention should be paid not only to the name but also to the actual technical and organisational structure.
Cloud
The application is used via an infrastructure provided by the supplier or a cloud service provider. Depending on the service offered, operation, the technical platform and updates are organised entirely or largely externally.
Hosting
The software is run on external infrastructure, but can be configured to a greater extent as a standalone customer installation. Who is responsible for the server, database, updates and operation depends on the respective hosting model.
On-premises
The application is operated within the organisation’s own IT infrastructure or in an environment controlled by the organisation itself. This means that responsibility for operation and technical maintenance lies more firmly with the organisation itself.
Important: Terms such as ‘cloud’ and ‘hosting’ on their own are not sufficient for a technical assessment. Companies should ask specific questions about where the data is stored, who operates the infrastructure, who installs updates and which administrative tasks remain the responsibility of the customer.
A direct comparison of the three operating models
| Criterion | Cloud | Hosting | On-premises |
|---|---|---|---|
| Own servers required | usually no | usually no | usually yes, or their own infrastructure |
| Technical operating expenses | often lower | depending on the hosting contract | often higher |
| Control over infrastructure | more prominent for the provider | divided or contractually agreed | more closely aligned with the company |
| Updates | frequently by providers | model-dependent | frequently coordinated internally |
| Integration of local systems | needs to be checked | needs to be checked | often more straightforward with a local system environment |
| Cross-site access | typically well suited | typically well suited | depending on the organisation’s own infrastructure |
This classification is deliberately kept general. The specific implementation may vary significantly depending on the product, provider and IT architecture.
1. How much of the IT workload should the company handle itself?
One of the most important questions concerns responsibility for technical operations.
In the case of an on-premises installation, depending on the architecture, tasks must either be carried out internally or by an IT service provider.
This may include:
- Provision of the server environment,
- Database operations,
- Data backup,
- Monitoring of the systems,
- Installation of updates,
- Fault analysis,
- Infrastructure capacity planning.
With cloud and hosting models, some of these tasks may be handled by the provider.
Companies with limited in-house IT resources should therefore consider not only the cost of the software, but also the effort involved in its technical operation.
2. How important is control over the infrastructure?
For some companies, it is important to run applications and data within a self-managed environment.
Reasons for this may include, amongst other things, internal IT requirements, existing security policies, specific integration requirements or industry-specific processes.
In such cases, an on-premises solution or a suitably configured hosting model may be of interest.
Other companies wish to outsource their operations as much as possible. In such cases, a cloud-based solution may be simpler from an organisational point of view.
3. Which existing systems need to be integrated?
The operating model should not be selected in isolation from the existing system landscape.
Resource planning may, for example, require data from the following applications:
- ERP system,
- PPS system,
- CRM,
- HR software,
- Time and attendance,
- Project management,
- Production systems,
- internal databases.
If these applications are operated entirely within the company network, it should be assessed at an early stage how an externally operated resource planning system can access them.
Conversely, an on-premises installation does not automatically mean that integrations are simpler. The decisive factors are the available interfaces and the technical architecture of the systems involved.
4. Where should the data be stored?
Before making a decision, it should be clearly established where application and planning data are actually stored.
Key questions are:
- In which country or region are the systems located?
- Who operates the infrastructure?
- Who has administrative access?
- How are data backups created?
- How long are backups kept?
- How is data made available or deleted once the contract has ended?
In doing so, companies should take their own legal, contractual and organisational requirements into account.
5. What are the requirements regarding data protection and security?
Data protection and information security can be implemented in any type of organisation. However, the responsibilities differ.
A local installation is not automatically more secure than a cloud solution. Similarly, a cloud solution is not automatically better protected.
What is relevant, rather, are specific technical and organisational measures.
The following, for example, should be checked:
- Access protection,
- User and rights management,
- Encryption,
- Data backup,
- Logging,
- Recovery procedures,
- Update and patch processes,
- Responsibilities in the event of security incidents.
Practical advice: The decision should not be based solely on whether the solution is ‘cloud-based’ or ‘on-premises’. The specific security and operational concept is what matters.
6. How important is access from different locations?
Companies with multiple branches, mobile staff or external planners often require access that is not tied to a specific location.
Cloud and hosting solutions can offer organisational benefits in this regard, as the application is already set up for external access.
An on-premises solution can also be made accessible across multiple sites. However, this requires the appropriate network infrastructure to be in place and properly managed.
When making a comparison, a realistic use case should therefore be considered:
- Who accesses the planning system?
- From which locations?
- Which devices?
- Do external staff require access?
- What form of authentication is required?
7. How are updates carried out?
Resource planning software is constantly evolving. Bugs are fixed, features are expanded and technical components are updated.
That is why it is important to clarify how updates are handled before making a selection.
For cloud models
Updates are often carried out centrally by the provider. This can reduce the internal IT workload.
For hosting models
Responsibility depends on the contract. Updates may be carried out by the provider, the hosting partner or following consultation with the company.
For on-premises
Updates typically need to be coordinated more closely with the organisation’s own IT department and carried out within the organisation’s own environment.
For companies with numerous interfaces, this additional control may well be desirable, as new versions can first be tested in a test environment.
8. To what extent does resource planning rely on an internet connection?
For externally hosted applications, the connection to the application plays an important role.
Companies should therefore assess what impact a failure of the internet connection or an external service would have on operational planning.
In doing so, consideration should be given not only to theoretical availability, but also to the operational implications:
- Can work continue without a planning board?
- How long would a system outage be tolerable?
- Are there any alternative ways of obtaining information?
- What level of availability is contractually guaranteed?
Of course, outages can also occur with on-premises solutions. However, in this case, the responsibility for redundancy and recovery lies more heavily with the company itself.
9. What are the actual costs involved?
The type of business operation affects not only the level of costs, but also their structure.
Cloud or hosting
Possible costs include:
- recurring usage fees,
- Hosting fees,
- Storage or additional resources,
- Support,
- Set-up and integration.
On-premises
In addition, internal or external costs may arise for:
- Servers and infrastructure,
- Databases,
- Data backup,
- Administration,
- Updates,
- Monitoring and maintenance.
That is why companies should not only compare the software provider’s quote, but also the total cost of ownership over several years.
For a comprehensive cost comparison, implementation and integration costs should be taken into account alongside operating costs. Find out more at Costs of resource planning software.
10. How soon should the software be available?
A cloud-based or pre-configured hosting environment can simplify the technical set-up, as there is no need to set up your own server infrastructure.
For on-premises solutions, additional time may be required for deployment, approvals, installation and technical testing.
However, this does not mean that a cloud project can be rolled out quickly by default. Data migration, process definition, interfaces and training remain relevant project tasks, regardless of the operating model.
11. What role does the company’s own IT strategy play?
Resource planning software should fit in with the company’s long-term IT strategy.
If a company generally migrates applications to the cloud, a new on-premises installation might be an exception that creates additional operational overhead.
Conversely, a company may deliberately choose to operate a highly controlled local system environment. In that case, it must be assessed whether an external solution is compatible with these requirements.
The operational model should therefore not be considered solely from the perspective of the individual planning project.
12. How flexible does a future change need to be?
A company’s requirements may change.
It is therefore important to clarify, before making a decision, whether a subsequent change to the business structure is possible in principle and what the associated costs would be.
Some interesting questions are:
- Can data be exported in full?
- What formats are available?
- Can the application be run in a different environment?
- How are custom configurations transferred?
- What are the contractual deadlines?
The longer a piece of software is to be used, the more important this flexibility can become.
Decision-making guide: Which business structure is right for you?
- to ensure that the company’s own IT workload remains low,
- where access across multiple locations is important,
- Updates should, where possible, be carried out by the provider,
- no in-house infrastructure is to be provided.
- if external operation is required,
- whilst individual operational requirements also exist,
- Responsibilities are to be allocated in a targeted manner under the contract,
- a dedicated customer environment is required.
- the infrastructure itself is to be controlled,
- if internal IT policies require this,
- there are close local integrations,
- Updates are to be managed internally in a controlled manner.
When might a cloud solution be unnecessary?
A cloud solution does not automatically offer added value if the company already has a suitable in-house infrastructure and deliberately chooses to operate its own applications.
Even where there are specific integration requirements, a locally or individually hosted installation may be better suited to the existing architecture.
What matters, therefore, is not which operating model is currently more popular, but which variant meets the actual technical and organisational requirements.
When can on-premises solutions be unnecessarily complex?
Setting up your own installation may involve additional effort if there are no specific requirements for a local infrastructure.
A company should therefore consider whether it really derives any operational benefit from being responsible for its own servers, database, backups and updates.
If these tasks merely result in additional administrative work, an externally managed approach may be more sensible.
How would you categorise Visual Planning?
With Visual Planning, the appropriate operating mode should be determined on the basis of the specific project requirements.
Of particular relevance are the existing IT infrastructure, desired integrations, user locations, security requirements and the question of which technical tasks the company wishes to handle itself.
The type of operation should therefore not be selected independently of the actual planning concept. For example, a solution with numerous ERP or PPS interfaces places different demands than a standalone planning board for a small planning team.
Which variant is available and appropriate for a specific Visual Planning project should be assessed as part of the technical project clarification.
What information should be available before a decision is made?
Before meeting with a software provider, companies should be aware of at least the following points:
- User: How many people use the software, and from which locations?
- Systems: Which applications need to be integrated?
- Infrastructure: What server, network and cloud environments are already in place?
- Data: What information is processed and where may it be stored?
- Security: What internal guidelines must be followed?
- Availability: What level of downtime would be acceptable from an operational perspective?
- Updates: Should the company manage updates itself?
- Administration: Which tasks can and does your own IT department want to take on?
- Integration: Do local systems need to be directly accessible?
- Cost: What internal infrastructure and operating costs are involved?
A practical test before choosing a business structure
It is easier to make this decision if you consider a typical working day.
For example:
- An order is created in the ERP system.
- The data is transferred to resource planning.
- A planner at another site schedules the order.
- An employee accesses the current schedule.
- The order is being postponed at short notice.
- The amended appointment must be available again in the master system.
For this process, it should be assessed what technical architecture is required and which operating model supports it at a reasonable cost.
If ERP or PPS is to remain the leading system, please also read, When is it advisable to use an additional digital planning board alongside an ERP or PPS system?.
Conclusion: Cloud, hosting or on-premises?
There is no single best business model.
The cloud can be an attractive option if infrastructure and technical operations are to be outsourced as far as possible. Hosting can serve as an interim solution when external operations need to be combined with specific requirements. On-premises solutions, on the other hand, offer more direct control over one’s own system environment, but typically entail additional technical responsibility.
When selecting resource planning software, IT effort, integration, security, availability and total cost should therefore be considered together.
The most suitable operating model is one that not only works from a technical perspective, but also aligns with the company’s long-term IT strategy and its actual planning process.
Frequently asked questions about the cloud, hosting and on-premises solutions
Is cloud generally cheaper than on-premises?
No. Cloud solutions typically involve ongoing costs, whilst on-premises solutions require additional infrastructure and administration costs to be taken into account. A meaningful comparison should consider the total costs over several years.
Is on-premises more secure than the cloud?
There is no one-size-fits-all answer to this. Security depends on the specific architecture, the technical measures in place, the operational processes and the respective responsibilities.
What is the difference between hosting and the cloud?
The terms are not used in exactly the same way by all providers. ‘Hosting’ often refers to an externally operated installation for a customer, whilst cloud services are more likely to be provided as standardised services. The specific technical and contractual arrangements are decisive.
Which business structure is suitable for multiple sites?
Cloud and hosting can simplify access across multiple locations. On-premises solutions can also support multiple locations, provided a suitable network and access infrastructure is in place.
Which business structure is best suited for ERP integration?
This depends on the ERP system and the available interfaces. A locally operated ERP system can be connected to both a locally operated and an externally operated resource planning system. The technical requirements should be assessed before a decision is made.
Can the business structure be changed at a later date?
Whether a change is possible and what effort it will entail depends on the specific software and architecture. This issue should therefore be clarified before the contract is signed.