‘On-premises’ refers to an operating model in which software is run on the organisation’s own infrastructure and under its own responsibility, rather than as a service provided by a third party. The organisation controls the location, access and operation of the software, but is also responsible for its installation, maintenance, updates and availability. On-premises is the counterpart to Software as a Service and is often chosen for reasons of data protection, confidentiality or availability.
What does ‘on-premises’ mean?
‘On-premises’ describes where and by whom software is operated – not what it does. The application runs on servers owned by the organisation using it, in premises or data centres for which it is responsible. It purchases or licences the software, installs it, configures it, keeps it up to date, and is responsible for its availability, backup and recovery.
The linguistically correct form is ‘on-premises’, derived from the English word ‘premises’, meaning business premises or premises. The shortened form ‘on-premise’, which is widespread in German-speaking countries, is a contraction that has become established in tenders, product descriptions and everyday language. Both spellings mean the same thing.
It is important to clarify the misconception that ‘on-premise’ is synonymous with ‘in one’s own basement’. What matters is not the geographical location of the hardware, but control over it: who has authority over the systems, who has administrative access, and who could shut down operations? An installation in a rented data centre can be considered ‘on-premise’, whilst a dedicated instance hosted by a provider remains a service relationship, despite having its own environment.
How does on-premises differ from cloud and SaaS?
The difference between the operating models lies in how responsibility is divided between the provider and the user.
| Model | Operated by | User’s responsibility | Typical characteristics |
| On-Premises | Users | Hardware, operating system, application, backup, update | Full control, full operating load |
| Colocation | User, area provided by the service provider | Just like on-premises, but without the building or the power supply | Own hardware in a third-party data centre |
| Private Cloud | Users or service providers | Depending on the configuration; dedicated infrastructure | No shared infrastructure with third parties |
| Infrastructure as a Service | Provider provides computing power | Operating system and application | Scalable; the user remains responsible for the software |
| Software as a service (SaaS) | Supplier | Configuration, user management, data | Minimum operational burden, minimum supervision |
| Hybrid | Mixed | Varies depending on the component | Critical parts manufactured locally, the rest as a service |
From a data protection perspective, this results in a clear line of reasoning: when operating as a service, a data processing agreement is usually required because the provider processes personal data on behalf of the client. In the case of genuine in-house operation, this scenario does not apply to day-to-day operations – however, it may arise again through remote maintenance, support or managed services as soon as third parties gain access to production systems.
What types of on-premises solutions are available?
On-premises is not a single, uniform model, but rather a spectrum with varying degrees of self-management:
- Traditional in-house operation: own hardware, own premises, own staff – the full-scale option
- Colocation: own hardware in a third-party data centre, which provides space, power, cooling and physical security
- Virtualised in-house operation: the application runs on the organisation’s own virtualisation or container platform, which significantly simplifies deployment and updates
- Operation in isolated networks: installation without an internet connection, for example in control centres, production networks or networks with specific confidentiality requirements
- Managed on-premises: The manufacturer operates or supports the application on the customer’s infrastructure – control over location and data remains with the customer, whilst the operational burden is shared
The latter option has gained in importance in recent years because it addresses the main drawback of in-house operation. However, it requires careful contractual arrangements, as the manufacturer is granted administrative access and may therefore, under data protection law, once again assume the role of a data processor.
What are the advantages of on-premises solutions?
The main advantage of on-premises solutions is control – over the storage location, access, the timing of changes and what the operation depends on.
Data sovereignty
The data never leaves your own infrastructure. Issues relating to transfers to third countries, sub-processors and extraterritorial access rights do not arise in day-to-day operations. Metadata – such as who communicated with whom and when – also remains within your own sphere of responsibility, which is not usually the case with third-party services.
Independence from the provider
Operations do not depend on whether a provider is available, changes its terms and conditions, discontinues the service or adjusts prices. For organisations with very long usage cycles, this is a significant planning advantage.
Operation without an internet connection
Applications can be run on networks that, for security reasons, have no external connection. For control centres, production environments and areas with confidentiality requirements, this is often the only permissible option.
Customisability and integration
Custom interfaces, tailored configurations and close integration with existing business processes, directory services and network structures are easier to implement than with standardised services.
Availability according to the organisation’s own priorities
The organisation itself determines maintenance windows, update times and restart sequences – which is particularly relevant wherever an update at an inopportune time would have operational consequences.
What are the disadvantages and costs associated with on-premises solutions?
The price of control is full operational responsibility. Everything that a provider takes care of in a service model must be handled by the organisation itself:
- Procurement and lifecycle management of servers, storage, networking and licences, including replacement after a few years
- Round-the-clock operation: monitoring, fault resolution, on-call duty, capacity planning
- Updating and hardening: prompt installation of security updates, configuration maintenance, vulnerability management
- Backup and recovery, including separate, immutable backups and practised restores
- High availability and disaster recovery, where the application is critical – with appropriate redundancy
- Staffing and expertise, on a permanent basis with reliable cover, not just for the implementation phase
- Infrastructure costs for space, electricity, cooling, fire protection and physical security
When assessing cost-effectiveness, the most common mistake is to compare capital costs with subscription costs. Only a total cost calculation covering the planned useful life, which includes staff, replacement costs, maintenance contracts and the risk of downtime, is meaningful. The result varies depending on the organisation: where a data centre and operational staff are already in place, the calculation clearly favours in-house operation; where both would first need to be set up, this is rarely the case.
Is on-premises more secure than the cloud?
Not automatically. An on-premises setup shifts the responsibility for security; it does not, in itself, increase it – and this distinction is the most important one when choosing a model.
In the service model, the provider takes on a significant proportion of the security measures: patching the platform, hardening, monitoring, redundancy and physical security. Large providers operate specialised teams for this purpose, which individual organisations are rarely able to maintain. With self-hosting, all of this falls back to the organisation’s own IT department. An on-premises installation that has not been updated for months, whose logs nobody analyses and whose backups have never been restored, is less secure than a carefully managed service – and it is precisely such installations that are a prime target for ransomware, because they are often accessible from the internet and rarely maintained.
Conversely, in-house operation offers protection options that do not exist in the service model: operation without an internet connection, complete network segmentation, no dependence on a provider’s security posture, and no third-party access to content and metadata. For certain security requirements, these characteristics are irreplaceable.
The crucial question is therefore not ‘cloud or on-premises’, but rather: who can actually operate the respective model securely, and for how long? This same question of competence also determines digital sovereignty – in-house operation without the ability to assess and maintain it creates dependence on service providers rather than independence.
What regulatory considerations favour an on-premises solution?
From a regulatory perspective, on-premises solutions are rarely mandatory, but they are often the simplest way to meet requirements.
From a data protection perspective, in-house operation eliminates the issue of third countries, and demonstrating GDPR compliance is simplified because neither data processing on behalf of a client nor a chain of sub-processors needs to be documented. For those bound by professional secrecy – such as in hospitals, law firms and medical practices – in-house operation also reduces the criminally relevant issue of which external parties are granted access to protected information.
In the field of security, in-house operation is often mandatory for content classified as confidential, and is subject to specific requirements regarding authorisation, network segregation and the operating environment. For operators of critical infrastructure and facilities falling within the scope of NIS-2, however, on-premises operation is not mandatory – the focus there is on risk management and supply chain security, which can be achieved under both models. In-house operation does, however, significantly shorten the supply chain and thus reduce the effort required for auditing and providing evidence.
What does ‘on-premise’ mean in the context of communications solutions?
In the case of communication solutions, in-house operation is particularly common because message content and connection data are among an organisation’s most sensitive assets. In practice, this raises four questions that should be clarified before implementation.
Integration with the directory service: User accounts, groups and permissions should be sourced from the existing directory so that user onboarding and offboarding take effect automatically and identities are not maintained in duplicate.
Operation without an internet connection: Whether a solution functions fully within an isolated network is a matter of architecture rather than a configuration option – it must be tested in advance.
Push notifications on mobile devices are the most commonly overlooked aspect. Mobile operating systems typically deliver notifications via the platform providers’ services; a server operating purely locally cannot therefore easily reach a device in sleep mode. Depending on the solution, there are various approaches, ranging from strictly limited forwarding without content to query-based methods, each with corresponding implications for battery life and delivery time. Anyone planning to use mobile devices for alerts should clarify this point early on and in concrete terms.
Finally, the distribution and management of clients is handled via device management – including configuration, certificates and policies – so that the application can be used without user intervention. For emergency services and organisations with volunteers, there is the additional question of how to integrate personal devices without mixing work and private use.
When is an on-premises solution the right choice?
On-premises is the right choice if at least one of the following conditions applies and operational capability is guaranteed:
- Classified information or information requiring special protection is processed, for which external processing is not permitted
- Operation must be possible without an internet connection or within completely separate networks
- A data centre, operational staff and processes are in place, and the application can be integrated without the need to establish new structures
- There are contractual or regulatory requirements mandating in-house operation
- The planned service life is long and the requirements are stable
Arguments against in-house operation include the absence of a permanent operations team, a lack of reliable patch and backup procedures, significant fluctuations in user numbers, or when rapid deployment is more important than maximum control. In practice, many organisations opt for a hybrid model, in which particularly sensitive areas are operated locally whilst less critical applications are sourced as a service.
In any case, a sound decision requires an honest assessment of the current situation: what skills are already in place, which ones would need to be developed, and who will be operating the system in five years’ time?
Summary: Key points regarding on-premises solutions
- ‘On-premise’ refers to running software on one’s own infrastructure and under one’s own responsibility, rather than as a service provided by a supplier.
- What matters is not the location of the hardware, but control over the systems.
- The model ranges from traditional in-house operation, through colocation and isolated networks, to managed on-premises solutions.
- Advantages include data sovereignty, supplier independence, operation without an internet connection, and customisability.
- The trade-off is full operational responsibility – from procurement and updates to emergency operations and staffing.
- On-premise is not automatically more secure: a poorly maintained local installation is less secure than a carefully managed service.
- Regulatory requirements rarely mandate in-house operation, but it shortens the supply chain and reduces the burden of testing and compliance.
- For communication solutions, directory integration, operation without an internet connection, push notifications and device management must be clarified in advance.
- The decision should be based on actual operational capability, not solely on the desire for control.