SaaS or On-Premise? Why we let our customers choose
A conversation with Claudius Jacoby, CEO of EC Systems
Few topics in the software industry are currently debated as fiercely as the question of the right operating model. Cloud or on-premise? Subscription or purchase? Many providers have long since committed to a pure SaaS approach. At EC Systems, we’ve always taken a different path. In this interview, our CEO Claudius Jacoby explains the advantages and disadvantages of the different models, and why we deliberately choose not to force customers into SaaS.
How does EC Systems position itself in this debate?
Claudius Jacoby: We think it’s important to clearly separate two things. On one side is the operating model, and on the other the licensing model. The operating model is about cloud versus on-premise, while the licensing model is about buying versus what we call renting, meaning a classic subscription. These are two independent decisions that often get mixed up in the debate. SaaS, at its core, is really just the combination of cloud operation and a subscription license.
We made a deliberate choice to let our customers decide on both points. A customer can, for example, buy our software outright and still have us run it in the cloud. The only exception is SaaS combined with on-premise operation, since that cancels itself out by definition. Every other combination is possible.
What matters most to me here is this. In our pricing, both models are treated equally. We don’t artificially inflate the cost of one model to push customers in a particular direction. Every customer is free to decide based on their own requirements.
What are the advantages and disadvantages of SaaS, from your perspective?
Claudius Jacoby: To keep things simple, I’ll compare SaaS, meaning cloud operation with a subscription license, to the classic on-premise setup, meaning running the system yourself with a purchased license. These are the two combinations customers choose most often in practice. The mixed form, buying the license but running it in the cloud, is just as possible with us, though it comes with its own trade-offs.
With SaaS, the advantages are obvious. The upfront investment is lower, since customers pay a subscription instead of a large one-time cost. Rollout is usually fast, because no infrastructure of your own is needed. The provider takes care of automatic updates and maintenance, and the system scales easily as users and resources grow. Add to that location-independent, mostly browser-based access, which is a real benefit for distributed teams and remote work. And of course, it takes a noticeable load off your own IT department.
But there are downsides too. There’s a certain dependency on the provider, the classic vendor lock-in. Ongoing costs can add up or increase over the long run. Customers have less control over their data and its security, and the system often can’t be customized as much as they’d like. Depending on the industry, compliance questions around sensitive data come into play as well.
And how does on-premise compare?
Claudius Jacoby: With on-premise, it’s almost the mirror image. Here, the focus is on full control over data, infrastructure, and security, plus the ability to customize the system and integrate it into existing environments. Operation doesn’t depend on an internet connection, and on-premise is better suited to strict compliance requirements. With stable, predictable usage, on-premise can even work out cheaper in the long run.
But there are downsides here too. First, there’s the high upfront investment in hardware, licenses, and implementation. Then you need your own IT staff to run and maintain the system, plus further investment whenever you need to scale. Implementation takes longer, and full responsibility for data security and system uptime rests with the customer.
When would you recommend one model over the other?
Claudius Jacoby: I’d recommend SaaS when a fast start and low IT overhead matter, when scalability and flexibility come first, or when customers prefer predictable, ongoing costs. A growing company that doesn’t want to get held up building its own infrastructure is usually well served by it.
On-premise, on the other hand, is the right choice when security or compliance requirements are high, when a company needs to adapt the system extensively to its own environment, or when long-term cost control matters more, given stable usage. This is often the case for companies that, for regulatory reasons, need to show exactly where and how their data is processed.
Where does the impression come from that many providers almost force customers into SaaS?
Claudius Jacoby: That mainly comes down to how companies get valued. Investors see recurring revenue from subscription models as especially reliable, so they reward it with higher valuation multiples than one-time license sales. For companies with investors behind them, that has a direct effect on their valuation and creates a certain pressure to lean more heavily into SaaS.
That sounds like you’re advising against SaaS?
Claudius Jacoby: No, not at all. SaaS has plenty of advantages, as we just discussed, and for some customers it really is the best choice. My point isn’t to argue against SaaS. It’s that I don’t want our customers to lose their room to decide by being pushed into one model or the other.
EC Systems is owner-run. That means we don’t have to align our business decisions with investors’ interests, and that gives us the freedom to let customers choose whichever model genuinely fits them.
Will EC Systems keep offering this choice long-term?
Claudius Jacoby: Our compass is the customer, not a trend. There are currently no plans or considerations to reduce our offering to a pure SaaS solution. Of course, we keep an eye on how our customers actually use these options, but we only change course when our customers’ needs change, not because of a trend.
Thank you for talking with us.
Wondering which model is the right fit for your business? Get in touch. We’ll advise you independently of whichever model you end up choosing.