On-prem
on-PREM
Software or infrastructure that runs on a company's own servers in their own facilities.
On-prem (on-premises) means running software on servers that the company owns and operates in its own data center or co-location facility. The company controls the hardware, networking, security, and maintenance. Nothing leaves the building. It is the opposite of cloud deployment.
On-prem exists for three reasons: regulatory requirements (data must stay in a specific location), security concerns (classified or highly sensitive data), and cost (at extreme scale, owning is cheaper than renting). Government agencies, financial institutions, and healthcare companies often require on-prem deployments.
For software vendors, supporting on-prem deployments adds significant complexity. You are not just building software; you are building software that runs in thousands of different environments with different operating systems, network configurations, and security policies. This is why many SaaS companies resist on-prem and why enterprise buyers sometimes demand it.
Examples
A healthcare company requires on-prem.
The company's compliance team mandates that patient data cannot leave their network. The software vendor deploys the application on the company's servers, trains their IT team on maintenance, and provides quarterly updates via secure file transfer. Everything runs inside the hospital's firewall.
A company moves from on-prem to cloud.
The company has 500 servers in two data centers. Hardware refresh is due, costing $3M. Instead of buying new servers, they migrate to AWS. The migration takes 14 months. They sell the old hardware and exit the data center leases.
A SaaS company adds on-prem for enterprise deals.
A $500k enterprise deal requires on-prem deployment. The SaaS company packages their application as a Kubernetes-deployable container, creates installation documentation, and provides remote support. The initial effort costs $200k in engineering time, but subsequent on-prem deployments are repeatable.
In practice
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Frequently asked questions
Is on-prem the same as self-hosted?
Close but not identical. On-prem specifically means the software runs in the customer's own facilities. Self-hosted can mean on-prem or in the customer's own cloud account (a virtual private cloud). Self-hosted is the broader term.
Why do some companies still prefer on-prem?
Data sovereignty (legal requirements to keep data in specific locations), security (sensitive data stays within their network), control (they manage updates and maintenance on their schedule), and cost (at extreme scale, owning hardware is cheaper than cloud rental).
Related terms
On-demand computing infrastructure (servers, storage, networking) provided by a third party.
Lightweight, portable packages that bundle application code with all its dependencies.
The requirement that data be stored and processed within specific geographic boundaries, often mandated by local laws or regulations.
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