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Cloud v/s On-Premises

Cloud v/s On-Premises HR Software

With companies shifting towards adopting technologies in all the areas of business, HR Technology has evolved as a revolutionary solution to manage HR activities in a quite well-mannered way. HR Management System or HR software has always seen as the number one priority when it comes to managing the most valuable asset of the organization – it’s employees. However, while choosing an efficient wellbeing platform for their organization, HRs are always seen in a greater dilemma during selecting an ideal deployment option from the two – On-Cloud or On Premises. So, let’s first understand more about these two solutions.

On-Cloud Solution:

The Cloud-hosted HR software is one which is managed and maintained on a remote server. On-Cloud HR software, also known as Software-As-A-Service (SaaS) deployment, can be accessed using internet & web browser.
It is a long established fact that With Strategic & tactical advantages, Cloud HR software has practically brought a revolution in the working style of the business.
It is also known as a quite cost-effective HR software and thus loved mostly by all the small and mid-size markets.

On-Premises Solution:

A legacy based approach of installing and implementing the HR software on your company’s IT space such as server.
This solution needs experience IT team or personnel to manage and maintain the on-premises solution.
Companies who have invested already in setting up the IT environment in the premises prefer to go with HR software having on-premises deployment to achieve better capitalization of the investment.
Now that we know the core differences between an On-Cloud HR software & an On-Premises HR software, it’s time to identify and understand the factors that arrive in mind while selecting any one of it. Below are those four key factors that arise to favor the best HR software:

Which option is having fastest set-up?

  • During the evaluation phase for an ideal HR software, the first factor is time involved in implementing or installing the HR software.
  • Companies are looking for HR software with fastest set-up to keep the TAT of implementation to go live as short as possible.
  • If the HR software is taking much time in implementation or more than the expected time to go live, the planning made by the management and HR team to take out the obsolete HR software or process and replace it by the new HR software can on toss which ultimately will hit other planning as well.

Which one is the most realible HR Software?

  • With company putting their time, efforts and money for implementing a new HR software, they will want a HR software on which they can rely on completely.
  • Company will make sure that they have done their homework properly before approaching selective HR vendors so that the HR software that they choose is giving a sustainable solution, which is giving long term benefit, which is covering all the areas of requirement and who knows your business vertical better to provide a perfect HR software.

Which one is most secure?

  • In the world of technology, security plays a vital role. With rising numbers of data theft & cyberattacks cases globally, companies are looking for HR software which is highly secure where the chances of the data getting stolen or lost due to virus attack is next to impossible.

Which one is cost effective?

  • Companies would always like to go with the HR software which is trustworthy but at the same it should be pocket friendly.
  • Though companies define budget before they hunt for an ideal HR Software, if it is going to burn a hole in the pocket post purchase, it may soon lead into discontinuation of using the HR software unless the scope of starting it from zero is less.
Though we have understood some key factors to finalize any one HR software, it is time to look at the advantages and drawbacks of both the options – On-Cloud HR Software & On-Premises HR software based on certain identified factors:

Size / type of the bussiness

  • Organizations having less than 250-300 prefer On-Cloud HR Software due to various factors. On-Cloud HR Software is also favorable for organizations who are not looking for any customization or detailed implementation.
  • However, organizations above 300 employees tend to be more inclined towards On-Premises HR Software and which are also looking for customization and very precise implementation as per business nature.

Data Security

  • In Cloud HR software, the data is hosted on vendor’s infrastructure thus the onus of taking care of security of the data is with HR software vendor and it will be protected only if vendor build a highly secured IT environment to keep the client data secured from all the threats such as cyberattacks, ransom attacks, data spying and data thefts. Also, data-backup plays a major role in case the data is lost due to any reason.
  • However, in case of On-Premises HR software, the data is hosted on your own infrastructure and the control of the data is entirely with the organization. Thus the IT team needs to make sure that proper measures are taken place to protect the data which includes data backup as well.

Cost Factor

  • On-Cloud HR software is always seen as a cost-effective solution due to its Pay-As-You-Use model. In other words, it is a OpEx model wherein capital investment is zero.
  • But operating cost is involved, and it can go high considering long run which includes other expenses such as additional cost involved in the enhancements or procuring additional module if required.
  • On other hand, On-premises HR Software is a CapEx model wherein Capital is invested largely on procuring the license and setting up the required infrastructure.
  • Thus, maintenance cost is involved when it comes to On-premises HR software such as License renewal, AMC, salary to the personnel taking care of the infrastructure.


  • There are no such pre-requisites when it comes to On-Cloud HR software since user can access to their accounts using internet & web browser.
  • However, if the user is having a low internet connectivity, chances are high that user can face difficulty in access to their account.
  • In case of On premises HR software, organization need to provide certain pre-requisites such as Hardware as per required configuration, licensed Softwares to run the server and IT team to provide the assistance in giving the remote access whenever required.
  • However, with moderate internet connectivity as well, there will not be any challenge in accessing the system.

Quick deployment

  • On-premise HR software takes time in installation of HR software since much time goes in providing the pre-requisites such as server, required softwares installation to vendors before they implement and then UAT is done before making the system live.
  • In case of On-Cloud HR software, the implementation is done at rapid pace since the HR software is already to use and once the data is uploaded and policies are configured, employees can start using the system.

Quick deployment

  • Implementation of HR software is quite quick in case of On Cloud HR software since the modules are available and ready to us. It becomes more of a “Plug & Play” process.
  • In On-premise HR software, organization may ask for very detail implementation of their policies and customization of required features can come in place which can delay the completion of the implementation process.


  • On-premise HR software takes time in installation of HR software since much time goes in providing the pre-requisites such as server, required softwares installation to vendors before they implement and then UAT is done before making the system live.
  • Organization feel the need of protecting the confidential data and thus by put restricition of accessing the link from outside, however employees find themselves it difficult situation.
  • Whereas employees can access from any where if they are using On-Cloud HR software giving the flexibility to employees of working from anywhere.
  • With the world moving towards BYOD concept, On-cloud HR software provides a matching solution to it.


  • One of the most important decision-making factors can be the more functionality one solution provides to the user.
  • In On-Cloud HR software, upgradations of the system such as updates, patches are done on the shelf and it doesn’t involve any role of the organization. Thus, organization have no role when it comes to auto upgrades or auto updates of new government compliance or fixing bugs in the product since it is taking care at vendor’s end itself.
  • However, for On Premises HR software, the control of the infrastructure is with their IT team and thus organization have to deploy dedicated task to their IT team to do the needful whenever there is any new patch release by the HR software vendor.

Data Ownership

  • Organization sometimes are very protective when it comes to allowing the data to go outside their network. Thus, companies tend to prefer on-premises HR software since the control over giving the access of the HR software can be defined by the organization themselves.
  • However, in terms of the On-Cloud HR software, the data is on the vendor’s infrastructure and thus the control over the data is not as much as it is in case of On-Premises HR software.

Capitalization of Investment

  • On Cloud HR software though is a quite cost-effective solution with no other investment such as infrastructure cost, maintenance cost, renewal cost, the commercials involved in this option is quite high considering long term comparison.
  • In case of On Premises HR software, post one-time investment, it can be capitalized and have the value depreciated.