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On-Premise Document Management vs. DMS Cloud: What to choose in 2021?

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The essentials in brief

The basics of on-premise and cloud document management

What is on-premise document management?

An on-premise DMS stores all data on an in-House server. The server is usually provided by the company itself, which prevents access by third parties. 

On-premise means that the application is hosted and controlled by the organization. Specialists within their own departments handle the administration and maintenance of the hardware.

The amount of storage depends on the capacity of the server. Normally, a higher one-time cost occurs, which is generally based on the number of users which are using the DMS.

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What is a DMS Cloud?

Unlike on-premise, with a cloud solution all data is stored externally in a data center by a third-party provider. As a rule, the storage space or the server is rented for a monthly or annual fee. The fee includes all updates and maintenance.

Cloud computing has gained in popularity in recent years. The costs of outsourcing important resources have been reduced, resulting in plenty of businesses leaping into this solution. IT departments were under pressure to operate more effectively, and outsourcing provided a good solution: Administrators didn't have to find the money for new hardware, and they could refocus internal teams by outsourcing day-to-day operations, updates, and security tests to an external server.

In accordance with the previous definition, a cloud-based document management system stores all files (and in some cases, the entire application) on a rented server. You gain access to them by establishing a connection to the internet. We've already mentioned that the application itself can be stored externally. This is due to the fact that some providers require at least some parts of the application to be installed on local computers, while others are distributed as a SaaS (Software as a Service) service that does not require any installation on local computers.

We invite you to our YouTube video where we discuss the possibilities of installing bitfarm-Archiv on one or more servers and external access (please enable english subtitles).

What are the advantages & disadvantages of on-premise document management?

Some advantages of using an in-House server are:

  • Saving money in the long run
  • Fast response time
  • Increased security

A server is not cheap to buy, and it is less costly to rent cloud storage in the short run. However, if you are planning to use a document management system for several years, the on-premise solution is cheaper compared to the cloud. If you buy a server, there is a significant initial investment, but depending on the cost of the server, you will have already covered the burden within a year or two.

There is also a significant difference in having a server a few meters away in a local network as compared to renting one thousands of kilometers away on the other side of the planet. Yes, international lines are quite good nowadays, and the distance gap is only visible in a few situations, but the wait time is still noticeable: Having the server locally will often result in a faster response time which is especially crucial when dealing with millions of documents.

Furthermore, many businesses are concerned about confidentiality, and some simply do not trust holding sensitive information on a server that they cannot physically access. A local server is also suitable in these situations since it is easy to monitor who has physical access to the server.

On the other hand, these are some problems which might occur when using an dedicated server:

  • Higher investment in the beginning
  • Higher energy costs
  • Maintenance of the server

As mentioned before, higher acquisition costs have to be factored in for a local server. High-performance servers in particular are associated with a high investment. This is critical if the budget for the implementation of the document management system is severely limited. Nevertheless, the long term must be looked at. Cloud solutions may be cheaper in the short term, but they incur more rental costs over the years. 

Also, you will spend more electrical energy, as well as possibly have a higher cost on the Internet service.  A dedicated IP is needed for your server and it should be considered, that dedicated connections are more expensive than those using dynamic IP.

In addition to the pure service, the spare parts for defects on the server must also be included. This is especially critical if an old or special server is used whose spare parts are difficult to obtain.

What are the advantages & disadvantages of a cloud DMS?

The most significant advantage of cloud-hosted document management is that it does not necessitate the use of an IT team to install and maintain the software. Furthermore, there are no significant upfront expenses. Access is available at any time and from any place. Backups are also carried out automatically.

Moreover, the web-based architecture allows for easy scaling. As a result, the system is adaptable and can expand or contract as companies expand or contract. In most cases, you only pay for the storage space you actually need. In most cases, it is still possible to add more storage space at a later date without any problems.

Spatial independence is achieved with the help of cloud software. Access can be given from anywhere as long as there is an active Internet connection. Some providers have also created mobile-friendly solutions. Of course, the ease of access comes with security issues and a reliance on a strong Internet connection. However, dedicated solutions also allow having access to the documents outside the office. This is usually achieved with a VPN-Connection and mobile-Clients.

Another important advantage is the cost aspect - the monthly or annual fees are usually far below the one-time acquisition costs of an own server. However, companies planning to use a document management system for several years should compare the long-term costs. In most cases, the total fees correspond to the one-time expenditure for a server after just a few years. Summing up, some of the main advantages are:

  • No need of maintenance
  • Easy scaling
  • No VPN-Connection for mobile access
  • Lower initial costs

The main drawback is that you are completely reliant on the supplier to keep the network running, so it is critical to choose a reputable provider who can certify proper data handling, recovery, and comply with the General Data Protection Regulation. Furthermore in case of a dispute, the provider may cut off your access to the documents until the conflict is resolved.

There's also the worry that cybercriminals will gain access to the information. This issue was often posed in the past as a counter-argument to cloud solutions. However, one should consider how professionally one's own organization will protect itself in the event of an assault. Many organizations' IT infrastructure consists of a combination of older and newer systems, making them vulnerable to attacks.

Another disadvantage is the need for Internet connection to access the data. This can be especially problematic on the road in certain situations. On-premise solutions often also offer the option of being able to work offline temporarily by means of data export. For example, we offer a so-called self-supporting archive for this purpose.

Most of the companies plan to use a document management system for many years. While the initial costs may be lower than a local server,  the expenses in the long run are usually higher. This is especially the case if the company decides to upgrade the storage plan after a certain time.

  • Reliance on the provider 
  • Data leaks might be possible
  • Need of an internet connection
  • Higher costs in the long run

Conclusion

In summary, both solutions justify one's existence and areas of application. When looking for the optimal on-premise server or the best cloud based document management system, it is necessary to plan well in advance in order to avoid subsequent expenditure. A later change from one solution to another is possible but involves additional effort and costs. The previous mentioned aspects may help you when making a decision:

  • Costs
  • Flexibility
  • Security
  • Response Time

You should weigh how confidential the data is and the initial budget for digital document management when making your decision. The majority of our customers have been using our system for many years and have thus already quickly recouped the initial investment in their own server.

In some cases, a conscious decision is also made in favor of a hybrid solution, which means that some of the data is located locally in the company, while other documents are outsourced.

While there are some provider for a free cloud document management, our open source DMS bitfarm-Archiv relies mainly on dedicated servers provided by the customer. Together with a MySQL database and the fast response time of the local server, millions of documents can be searched by full text in a few seconds. In addition, many of our customers value the best possible security for their data. This is particularly the case with public authorities or tax companies. A cloud connection is nevertheless possible at bitfarm-Archiv if the customer selects an external provider for the service. Are you interested in more information around the topic of digital document management? We gladly invite you to our YouTube series (please enable english subtitles).

Further reading: sources and interesting links

Are you interested in more information about the topic of on-premise and DMS cloud?

Wikipedia

Northwestern University

CDMU

Researchgate