shutterstock_164490998Despite the increasing organizational significance of document management software (DMS), the differences between online, cloud-based and on premises DMS mediums remain cryptic to many. In this whitepaper, we’ll explore 14 definitive differences between on premises DMS and online, cloud-based DMS – helping existing and prospective users alike decide which model is best for their organizations, and to what ends each DMS model can be utilized.


13. Misconceptions

The differences between on premises DMS and online, cloud-based DMS begin not with the technologies themselves, but rather the misconceptions that prospective users (and even existing users) have about them.

For instance, many perceive the cloud to be an emergent technology with questionable security capacities – particularly because of its status as a ‘newly minted’ technology in the business world. However, the cloud, sometimes referred to as a ‘hosted service,’ or ‘SaaS’ is not as new as people think. In fact, its origins can be traced to the advent of commercial computing, which occurred over two decades ago.

Furthermore, it’s also not as intangible as the term ‘cloud’ implies. Rather, the cloud is a global infrastructure occupying many different tangible spaces (highly encrypted data centers) around the world, integrating the enhanced security, collaboration, and storage bandwidth demanded in many industries.

Although fewer misconceptions are associated with on premises document management software, one misconception about on premises software looms largely, and that misconception is that on-site IT is always needed to assist organizations in use of on premises DMS. However, most document management vendors offer services through resellers or training programs that take an organization’s existing IT staff out of the list of on premises necessities.

12. Data Migration

Given much misplaced fear in DMS implementation, the data migration differences between on premises and online DMS are key differentiators. Once an organization’s data and content have been migrated to the cloud, it is there to stay, which is a benefit for two reasons: 1) data migration is expensive, and 2) data migration is time-consuming. However, with on premises DMS, additional data migrations may be needed depending on an organization’s IT strategy – especially since most organizations who purchase on premises document management software tend to switch systems every 5 – 10 years.

11. Functionality

Cloud based solutions earn their ‘online’ monikers by virtue of the fact they can function in-browser on the internet, and this is important for several reasons. Virtually any information device can gain access to the Internet these days, whereas with on premises DMS, access to organizational storage and collaboration features remain tied to the software’s point of installation/origin.

However, the cloud can transcend issues with desktop compatibility sometimes found in niche operating systems (niche meaning not within Windows). Essentially, cloud-based, online DMS is, beyond any serious criticism, more functional than its on premises counterpart, particularly because of its accessibility via mobile applications and consumer-grade laptops (such as Mac), which are becoming increasingly popular in the enterprise.

10. Price

Many know the up-front price differences between on premises and cloud-based DMS, but few understand the differences in long term value. And, as always, value and price must be viewed hand-in hand.

Price is the most complex facet of these two technologies’ differences. On one hand, there are simple, bottom-line methods of measuring the expenses of each, and on the other hand, there are ‘benefits’ that are much more difficult to initially calculate as hard ROI. Initially, the cloud costs less across the board from simple calculations, but both on premises and cloud-based DMS will generate ROI for organizations due to the fact that each technology helps organizations go paperless.

However, it should be noted that in general, organizations will have to spend more on electricity costs with an on premises solution, and on premises solutions are better fit for rural offices as these areas have fewer Internet speed/access options.

9. Information Technology Considerations

Although online, cloud-based DMS products are designed to integrate and sync with an organization’s preexisting, on-site IT infrastructure, this doesn’t mean that on premises solutions are more difficult to implement. Although server management resides inside the business itself with on premises solutions, the vendor can (and usually will) provide services to ensure the DMS runs smoothly.

8. Accessibility

Cloud gives access to more servers without occupying significant space with multiple servers/mainframes in an office. The cloud has more interconnectivity bandwidth, meaning that, since it’s more accessible in more places, it has a temporal ability to connect a greater number of people at mission-critical times. However, in terms of bandwidth and as you’ll see later in this article, cloud-based server bandwidth is harder to come by with cloud solutions – whereas with on premises DMS, you will be working with a terminal server.

7. Outsourcing

Outsourcing has become a fact of the organizational world, particularly in the western hemisphere. Although outsourcing employees as a business function itself has distinct pros and cons, the pros and cons of certain software are more set in stone when it comes to utilizing employees. It is easier to keep ‘all your ducks in a row’ with a cloud-based DMS if you’re outsourcing a significant percentage of your employees. Outsourcing with on premises solutions may initially straighten out the additional up-front costs associated with the software – but over time, collaboration and communication won’t be as easily achieved.

6. Growth

The cloud is more conducive to growth if the organization using it is small and intends to grow, whereas on premises DMS is more fitting for growth if deployed in an organization that already has a significant number of employees. Virtualization, as a large component of any IT professional’s skill set, may not be so helpful to organizational growth as it was roughly a decade ago, because the cloud is gaining a stronger foothold with each passing year.

Additionally, growth at the most mission-critical stages of an organization’s development (such as its first five years) is more easily attained through a smart handling of operating expenses (OPEX), than it is capital expenses (CAPEX) – and moving to the cloud provides an easier means to cut operating expenses.

5. Environmental Impact

Although most people will think of both on premises and cloud-based document management software as environmentally beneficial due to their ability to help companies go paperless, there are several differentiators among the cloud and on premises solutions in terms of reducing environmental footprint.

The software through which a company operates is as integral to its branding consistency as the messaging dispatched in client-facing material, and this is where either an on premises or cloud-based document management software can concomitantly benefit an organization. Many organizations of all sizes are using their environmental stance to bolster public relations opportunities and their brand identities in relation to their competitors – and both of these software options are viable starting points for such an objective.

4. Bandwidth and Services

Bandwidth is important to data migration, and with an on premises solution, bandwidth is only limited by the preexisting network of your organization. Here’s where on premises can trump the cloud: sometimes there is less bandwidth than desired with the cloud, but on premises tends to provide more bandwidth across the board, despite it incurring more power and electricity costs. Furthermore, as a services investment, the cloud, at most, will require some consulting services as needed, but software upgrades with on premises solutions may require technical support amid crucial updates – sometimes slowing down the typical speed of operational processes.

3. Intuitiveness

On premises solutions are typically easier for DMS newcomers to understand. But the cloud, as a web technology, offers a certain degree of customizability that can render the solution more intuitive to its user. Despite the intuitiveness of the cloud, on premises is a technology that’s been around for a while, and can be likened to the intuitiveness of software comprising the Windows interface.

Despite these differences, both modes of DMS usage provide the software integration needed to make processes more intuitive with an existing tech infrastructure.

2. Implementation

Regardless of the DMS medium – implementation – contrary to popular belief, does not have to be a painstakingly long, tiresome, and expensive process. Insomuch as organizations leave no stone unturned and plan for implementation effectively, the process will be relatively simple and short – usually spanning no more than one month with on premises, and one to three weeks with the cloud (this estimate includes the time it takes to scan all documents and have them indexed within the DMS, and under normal operating conditions).

Although implementation time will drastically vary from organization to organization, the cloud takes the cake when it comes to speed of implementation as many implementation steps are more easily (and proprietarily) completed by the DMS vendor with cloud based solutions – making implementation easier for you.

Implementation time will also vary depending on preexisting infrastructure. For instance, if an organization relies heavily on preexisting cloud applications, on premises implementation will likely take longer, and vice versa.

1. Customizability

On premises offers more control over how security is implemented, measured, and contained, whereas the cloud, although not as customizable, is arguably more configurable – meaning external components are more easily integrated into the system.

An organization with a lot of programming demands may want to consider this option. As with any new technology, there are always going to be somewhat limited integration capabilities with preexisting organizational structures. However, the right document management software, whether on premises or in the cloud, can offer software integration to mitigate the impact of customizing challenges.