Updated: May 13
When shipping software shopping, one of the most critical factors in your decision will be whether you choose to deploy it on-premise or in the cloud.
Cloud-based shipping software is more common than ever before. Today, nearly every shipping software vendor offers some form of cloud deployment option or, in some cases, a hybrid option that blends the best of both worlds.
The fact that organizations are spending a lot of money on cloud software doesn't mean it is the best option for you.
Deployment & Pricing:
Cloud-based shipping software is hosted on your vendor’s servers and accessed through a web browser with perpetual subscriptions payments.
Premise-based shipping software installs on your server with a one-time license fee.
Tax Considerations: Premise-based shipping software is typically a capital expenditure with one payment upfront, and cloud-based software is typically an operating expenditure you will continue to pay with no ownership transfer opportunity.
Cloud-based shipping software’s low initial cost has contributed to its widespread adoption. However, system costs tend to converge over time with premise-based software taking the “low-cost leader” role after a few years of use.
Pros & Cons of Cloud-Based Shipping Software:
Buyers used to be wary about the security of cloud-based shipping software. However, most cloud vendors have strict data safety standards.
Most cloud systems also offer easy mobile accessibility, but this ease of access equals greater security issues, especially if employees access company files on personal mobile phones.
More “one size fits all” access for the masses also means less customization for you. Cloud-based shipping software offers less flexibility and a lot fewer customization options.
Pros & Cons of Premise-Based Shipping Software:
In general, premise-based shipping software is much easier to modify. If you have unique shipping business automation rules, complex integration needs or customization requirements for your unique workflows, premise-based shipping software is the best fit for you.
Premise-based shipping software provides more control and security of your data.
Premise-based shipping software is the best fit for businesses with customized system operations and the existing infrastructure to host, maintain and protect critical data.
Here’s a Simple Breakdown of the Pros and Cons:
Conclusions and Next Steps:
In closing, there are more shipping software options than ever for businesses of all sizes. Cloud-based deployment models have made shipping software cheaper to acquire, but cloud software has limited customization capabilities and potential security concerns.
On the other hand, premise-based shipping software offers a high degree of customization and control but is more expensive upfront. Higher initial cash outlays can be problematic for small businesses with limited budgets.
In the end, there isn’t one best answer. You need to understand your requirements, work with your vendor to establish a real world, hard-dollar ROI based on your current cost benchmarks and decide what’s best for you.
Over the past several years there has been a serious migration from premise-based to cloud-based shipping software, and there is no reason to believe this trend won’t continue. However, we all agree that most businesses will never move completely to cloud software. In many cases, premise-based software provides the customization flexibility, processing power, enhanced feature sets, long-term cost savings and data security that cloud-based software can’t compete with…at least for now.