Cloud billing vs. On-Premise billing: What billing solution is right for you?

Cloud billing or On-premise Billing?

This is one of the central questions currently being asked in many companies. In the last years, digitization has penetrated all sectors and industries. New digital business models no longer come only from innovative start-ups, but increasingly also from established large companies and corporations. At the same time, this means that existing billing solutions are quickly reaching their limits. Conventional software solutions are no longer designed for today’s increasingly complex business processes. Especially when it comes to internationalization, currency and taxes, there is no way around internal system adjustments. The decision whether to use a cloud or on-premise solution must be carefully weighed up.

The most fundamental differences: Cloud billing vs. on-premise billing software

Cloud billing software

Cloud-based software as a service (SaaS) is hosted by a software provider on external servers. The user of the software (the company) accesses the software (SaaS) via a web browser. Purchase of hardware, operation, and maintenance are the responsibility and liability of the server operator.

On-premise billing software

In the case of on-premise solutions, the software is hosted locally on servers at the company’s own premises. This hardware is owned by the company and must be serviced and maintained by qualified personnel (internal or external).

Let’s take a closer look at the most relevant aspects:

Costs

A key factor is the expected cost of purchasing and maintaining the hardware and upgrading it as the business grows. In addition, experts are needed to take care of the regular maintenance of the servers. As a rule of thumb, depending on the size of the company, at least one specialized employee must be hired for this purpose, who keeps an eye on the system at all times and intervenes if necessary.

With cloud-based billing systems, this burden rests entirely on the shoulders of the provider. Maintenance, updates, backups, etc. are usually included in the server usage fee. Costs can be scheduled; failure risks can be covered by appropriate service contracts.

Flexibility

On-site billing solutions can effectively support the needs of an organization at the time of implementation. If they are smartly planned, they also cover a medium-term view of developments in the coming months. In most cases, however, on-premise solutions cannot be designed for short-term adjustments. Every change requires at least a small, if not in special cases even significant, investment in the billing solution. Changes to on-premise systems are often time-consuming, which can significantly delay the introduction of new business models. Thus, entrepreneurs run the risk of missing opportunities.

Cloud-based systems are designed to flexibly and individually support all the pivotal points of a company. They are easy to configure and can also be controlled by a large number of employees in different departments of the company. In addition, and this is one of the key advantages, they are agile enough to follow new trends and react quickly to customer needs, thus enabling them to take advantage of new opportunities in the market. New business models can be implemented quickly and tested with low risk.

Growth

Growth is one of the most important goals for companies. In this respect, scalability is another advantage of a native cloud-based solution. On-premise systems often require costly intervention for expansion when a business model is scaling, the customer base is growing or revenues are increasing. What’s more, as soon as demand falls again, you still have to pay for the available, unused capacity.

Cloud-based systems offer a high degree of elasticity that makes it easy to react quickly and to increase or decrease capacity according to demand at low cost – while adjusting ongoing costs. These are optimal conditions for flexible company growth.

These advantages become increasingly important when companies want to grow internationally. While local solutions can be developed to manage multiple currencies, taxes, languages and payment methods, scaling to new countries often requires adding servers in new regions. With cloud-based payment management, adding capacity is seamless. This makes it very easy for international companies to manage and continuously adapt to the complexity of currencies, taxes, regulations, languages and localized payment methods around the globe. 

Integration

Companies typically use a variety of different systems to automate processes and ensure a smooth customer experience. One of the greatest challenges faced by IT experts is ensuring that all systems interlock reliably and work together without errors. However, on-premise solutions often tend to make integration with other systems problematic once they are not in the same environment. When platform-independent solutions are required, data often has to be transferred manually – another significant drain on time, resources, and budget.

Cloud-based solutions are designed to work seamlessly with other systems. CRM, ERP, CPQ, and other systems can be easily integrated, enabling automated workflows and seamless, real-time data transfer between platforms.

Conclusion

Cloud-based billing solutions offer greater agility and flexibility, enabling organizations to quickly meet customer needs and expectations and achieve an organization’s growth objectives. 

Nitrobox’s Cloud-based Order-to-Cash Platform (SaaS) helps large enterprises automate financial processes, adopt new digital business models, and enable rapid growth in line with the company’s current business needs. Explore our robust billing automation features or Book your demo today to see our cloud-based Smart Finance Platform in action.