On-Premise Software refers to applications installed locally on a company’s own servers and computers within their facilities rather than accessed via the internet from cloud-based providers. With on-premise deployment, the manufacturer owns or leases the hardware, installs the software on those systems, maintains the IT infrastructure, applies software updates, manages security, and performs backups, retaining complete control over the computing environment. Historically, this was the only deployment option for enterprise software like ERP and MES systems, requiring substantial upfront capital investment in servers, networking equipment, and IT staff, but providing organisations with direct control over their data, customisation flexibility, and independence from internet connectivity or external service providers.
The advantages of on-premise software include complete data control (information never leaves your premises, addressing security and compliance concerns), extensive customisation capability (direct access to underlying code and databases allows modifications meeting unique requirements), integration flexibility (easier connection to existing on-premise systems and shop floor equipment on local networks), and no dependence on internet connectivity (systems remain operational during network outages). Some manufacturers in highly regulated industries or those handling sensitive intellectual property prefer on-premise deployment to maintain maximum data sovereignty. Performance can also be superior for data-intensive operations when systems and users are located together on high-speed local networks rather than communicating over internet connections.
However, on-premise deployment carries significant disadvantages that have driven many manufacturers toward cloud alternatives. Capital expense is substantial (servers, storage, networking equipment, facility infrastructure), creating barriers for smaller manufacturers. Total cost of ownership includes hardware replacement cycles, software licence fees, maintenance contracts, and full-time IT staff for administration, security, updates, and troubleshooting. Scalability is rigid, requiring capacity planning and equipment purchases well before growth occurs. Disaster recovery requires duplicate infrastructure at alternate locations. Software updates are complex projects requiring testing, coordination, and potential downtime rather than transparent background updates in cloud systems. Remote access for mobile users or multiple sites requires additional infrastructure like VPNs. Many manufacturers now pursue hybrid approaches, maintaining certain applications on-premise (often due to integration requirements with shop floor systems) whilst moving others to the cloud (particularly those benefiting from mobile access or serving multiple locations), balancing control, security, cost, and operational requirements across their technology portfolio.
