When it comes to choosing a PIM system, one of the biggest debates is deciding between SaaS or on-premises. While on-premises solutions still have their followers, in recent years cloud-based PIM systems seem to appeal to organizations as a reliable, low-risk and worry-free alternative. However, you need to analyze both options to understand which one fits your business better.
For some companies, purchasing an on-premises PIM platform and taking care of hosting on their own is the best option, especially if they have an existing hardware infrastructure and internal IT support or handle sensitive data and complex regulatory requirements. For others, benefits such as faster deployment, lower upfront costs and scalability associated with SaaS PIM are essential.
Whether you’re starting your PIM journey or considering moving to the cloud, you should always keep your business goals in mind. What do you want to achieve and how fast do you want to achieve it? What are your priorities? Read on as we highlight seven parameters that can help determine which PIM is right for you.
On-premises means “on-site” – it’s bought under a license and hosted in the customer’s server landscape. The installation process is carried out on-site by the provider. Most organizations find the need to hire specialist staff members for the operation and maintenance of such in-house technology.
A SaaS PIM system is available on a subscription model in a cloud-based environment and can easily be updated remotely, ensuring the latest and most efficient version is used at any given time – with no need for IT intervention by the subscriber. Depending on the subscription model, unlimited storage space is offered.
According to Gartner, on-premises software spending is 13 times greater than Software as a Service spending. Usually, SaaS is billed at a certain amount per month while on-premises software and hardware involve paying up front. However, apart from the costs associated with software licensing, there’s a variety of hidden costs regarding the implementation, customization and maintenance of on-premises PIM systems. Depending on the scale of your internal systems, the cost of hiring and training specialized IT personnel will vary. And we’re not even getting started with the costs of updates that accumulate over the years.
With SaaS, there are little to no infrastructure costs or license fees involved — which provides you with long-term planning security. Plus, maintenance costs are significantly reduced as the cloud environment is centrally managed by the PIM provider. With a cloud-based PIM, you can start small with low entry costs and scale with growing demands. Even though SaaS costs may rise in line with your business requirements, you can easily scale up and down and enrich the platform with available integrators and connectors as you go. This way you pay only for what you’re using.
Data privacy is one of the biggest concerns of any business when choosing a PIM. Contrary to popular belief, storing your data in SaaS applications is not riskier than storing it on premises. Indeed, 94% of businesses experienced a significant improvement in security after implementing cloud computing services. When using cloud-based PIM solutions, data security lies with the cloud provider, which must meet the standards of the International Organization for Standardization (ISO) and provide security certifications. Storing product data in the cloud also means it’s always backed up and you can easily recover any compromised information.
Enterprises that prefer on-premises PIM solutions are fully responsible for maintaining the integrity, confidentiality and availability of their data. The effort is considerable, and the costs are not fully manageable. Hardware requirements must be met, and updates installed regularly. Plus, the backup and maintenance of the programs are carried out by the internal IT department. Although data breaches can occur in both PIM deployments, your PIM solution should ensure complete security for your product data at all costs.
With an on-premises PIM system, you need to either have staff on site or arrange for remote support. In case your on-site PIM breaks down, your IT team may not be available to solve the problem immediately. This option also limits the possibility of updating product information outside of regular working hours. Additionally, managing such a system is likely challenging if you adopt hybrid working arrangements. The cost of additional network or carrier services must also be considered, leading to increased financial burden and operational complexity.
The challenges of connecting to an on-premises solution remotely (via VPNs, firewalls, intranets, etc.) disappear when working in a cloud environment. An Internet connection and browser are typically all that’s needed for employees with the necessary security privileges to connect to the application. This can facilitate 24/7 operations, which is ideal if you want to grow your operations internationally. In practice, a cloud-based PIM allows for more accessibility and shareability of product data in line with set security measures. It also gives geographically dispersed teams the ability to collaborate in real time.
In business, you want to make the most of your resources. But providing the IT infrastructure for an on-premises solution and performing recurring migration tasks tie up financial resources and internal staff—indirectly leading to unpredictable costs. The additional resources ultimately reduce the focus on the core business. As a result, expertise is built in areas that are not contributing to growth and potential expansion is not promoted as strongly.
On the other hand, with SaaS PIM, you can quickly launch a productive solution to manage your portfolio effectively and get your products to market faster while saving money and human resources. Initial setup takes a fraction of the time of a typical implementation phase — which accelerates time-to-value. On top of that, features and professional templates are commonly available to aid in transferring data and processes into the system. This means that a PIM accessed on a SaaS basis shortens the time needed before product information is ready to be distributed across different channels.
In theory, every business could be run from the cloud, but this ignores the reality that many companies have built core technology stacks over time. These are carefully calibrated on-premises systems that enable organizations to undertake business-critical tasks - e.g., enterprise resource planning (ERP) and customer relationship management (CRM). This is especially true for brands that manage multiple processes, from design and manufacturing to selling across multiple channels.
For such companies, any change affecting the core technology stack must be carefully planned. The good news is that SaaS provides the flexibility to meet complex operational standards. This means businesses can either replace core technologies entirely or, more likely, augment them with SaaS offerings as needed. Additionally, with a cloud-based PIM, companies can easily take advantage of market opportunities without depending on internal IT support. Likely scenarios include launching seasonal promotions or clearing overstocks through sales discounts.
As hybrid work becomes more prevalent, and employees become less physically centralized, businesses look for ways to make people’s work as efficient as possible. In fact, 48% of HR and IT leaders plan on investing in technology to help improve the employee experience. Unlike traditional models that need a dedicated IT team to manage and maintain the system, most cloud-based PIM solutions are easy to use. They're designed with retailers, manufacturers, ecommerce specialists, product managers, sales and marketing teams in mind.
With SaaS PIM, employees can automate mundane tasks, leaving them room to prioritize other equally important responsibilities. By giving employees local autonomy over the enrichment process and direct access to the data and assets they need to complete their tasks, your team can work more efficiently while improving the quality of your product information. This makes it easier for all users to stay up-to-date and execute your business plan.
A key argument against using on-premises PIM systems is the limited ability to upscale or downscale as business requirements change. Compared to a traditional model, a cloud-based PIM easily scales with the business. There’s no longer a need to purchase other servers or software. This is particularly valuable in ecommerce where brands often want to start small and expand gradually.
Instead of having to buy new server capacity or hire additional IT specialists, companies can adapt SaaS PIM to growing business requirements with a simple upgrade — all at a fixed monthly price. This makes it easier to take on more storage space, add new users or include new features. One approach that brands have successfully taken here is to begin with one sub-brand or product line within the business. A furniture manufacturer might, for example, initially focus on onboarding its bedroom range onto the PIM and then take the knowledge from this process to other ranges.
Here’s a practical example: A sports goods manufacturer decided to introduce PIM as a single source of truth to consolidate its product content and digital assets. Initially, they implemented PIM/DAM on premises to better manage and establish customizations within the environment.
However, as a growing business, the company now aims to expand its PIM to other regions to support local teams. After careful consideration, they chose to transition to SaaS. Its aim is to leverage the available resources to gain maximum stability for its users in their daily work and increase the availability, reliability and performance of the platform compared to the on-premises deployment — instead of investing in further infrastructure, IT staff and licenses.
Results:
Choosing the right PIM solution depends entirely on your business requirements and goals. That’s why you need to assess the costs, benefits and associated trade-offs of both PIM deployments — on-prem or cloud — to make the best decision that guarantees long-term success. If you have a core technology stack and prioritize on-premises deployment, choose a software provider that offers both options. This way, if in the future, you switch to SaaS, the transition will be faster, smoother and cheaper compared to the migration to a new vendor.
Overall, you should carefully consider what you require in terms of deployment, performance, updates, accessibility and technology. Take the time to weigh the importance of such factors to make a final choice that matches your product experience goals and data management strategy.