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On-premise vs. SaaS – old story, new twists

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In this blog post, our International Sales Manager, Max Büscher, compares SaaS and on-premise: Which solution is best for whom - or can you switch easily between them and make the best of both worlds?

If you are in ecommerce it is very likely that you have come across the story of on-premise vs. SaaS. It seems to be the never-ending tale that leads to loads of discussions.

When I started at Shopware three years ago the story would’ve been the following: SaaS is mostly ideal for small businesses that want to launch an online store quickly and easily. On-premise would be for mid-size to larger merchants that have already established their market position and need complete flexibility and control over their online presence.

Well, that has changed rapidly the last three years alone and the ecommerce industry has added a few new twists and turns to the story.

On-premise and SaaS – what do the terms mean?

Before we come to the comparison of SaaS and on-premise, let’s do a little recap. What do these two terms mean exactly?

On-premise

On-premise used to be the term for a platform that is installed on a business' own server. Nowadays it means that you buy a license, most often for an open source platform, and host it wherever you want. While this could be on your own server sitting in your office, the more popular option is to work with a hosting provider or use a cloud infrastructure.

SaaS

SaaS stands for “Software as a Service”, which means you rent an instance of a platform that runs in the cloud. For SaaS, both the hosting infrastructure and the application itself is managed by the provider.

The difference

While an open source solution gives you full flexibility, because you can access and modify the code base of the platform without any limitations, a SaaS solution can be easier to set up, scale, and maintain.

Open source or SaaS – what is better?

The main question that you need to ask yourself should always be “What is the right solution for my business model”. Let me give you a few examples.

Example 1: A small brewery enters the wide world of ecommerce

Starting a business, or expanding from offline to online, can be a herculean task. Just imagine a small brewery that has a local shop and is passionate about the craft beer they produce. They want to be able to let people from all over the country taste their craft beer. A SaaS platform like Shopify has a low entry fee and can be set up quite fast. Adding products, selecting the right payment and shipment method, adding an age verification page – and they are good to go.

With little risk they can now see if their small brewery can compete with all the other breweries selling online.

Example 2: The bigger the brand, the more complex the requirements

If you are a more established business that has already been selling in a handful of countries for a couple of years, things can be quite different. You are willing to invest a significant amount of resources in a brand new online shop that meets both current and future demands and acts as one of the key revenue streams for your company.

Obviously, you do not have only one product, like our small business brewery. Imagine a company with 100+ employees that sells furniture and wants to differentiate with a unique pure online experience. They need robust custom integrations to their warehouse management system; they also need to achieve an international roll-out with their new platform. Which means multi-language and multi-currency needs to be an out-of-the box functionality. They also want to build a bespoke 3D furniture AR integration that allows their customers to place furniture virtually in their home through a smartphone camera. In addition to this, they want to offer complete furniture sets, like a table with matching chairs, for one fixed price that is less expensive than the same items purchased individually.

These types of more advanced requirements can only be met with flexibility of an open source solution. SaaS that comes with a cloud hosting does not give them the flexibility they need.

Example 3: Locked in a closed system with SaaS?

Coming back to the small brewery from the beginning, who tried selling their craft beer online: Turns out that it was highly successful. As a next step they want to sell more variations of their beer and start distributing throughout Europe. They also saw that as the business grew the costs of their SaaS platform grew in the same way. With a bit of money they’ve set aside, after their successful launch, they want to start with an international roll-out. But switching to an open source platform that meets their needs would mean a complete replatforming of their online business. Basically, their growth is limited by the capabilities of their current solution – they're locked in a walled garden.

Especially for this business case, a solution that offers a seamless migration from the SaaS world as we know it to an on-premise open source world would be ideal.

Conclusion

If you decide to go with SaaS, you will always have limitations in terms of customisation, and you will never have the full control over the code base. If that is acceptable for your business, you can enjoy an “easy-to-scale” and “easier to maintain” platform approach. An open source platform allows agencies to develop differentiated customer experiences for merchants which can lead to a competitive advantage.

And what about the twist?

Shopware is the only ecommerce platform provider that offers both SaaS and an open source solution that is fully customisable, plus a unique way to migrate between the two worlds without the need to rebuilding the entire online store.

Our team would be happy to speak with you about how this is possible. Just get in contact with us by writing an email:

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