On-premise vs cloud accounting software: what is the difference?

On-premise accounting software is installed and run on a company's own servers under a perpetual licence; cloud accounting software is hosted by the vendor, reached through a browser and paid by subscription. The choice affects cost, upgrades, integrations, access and who is responsible for security.

Definition

Per user per monthCloud pricing

Licence plus maintenanceOn-premise pricing

Data and historyMigration issue

Cloud has won for new purchases: it needs no hardware, updates continuously, connects to banks and apps through APIs and is priced monthly. On-premise persists where companies have heavily customised ERPs, strict data residency rules, or long-amortised licences, and in firms running desktop tax and accounts production suites. The migration path is the accounting data migration problem: moving history, mappings and open items into the new system without breaking the audit trail.

Common questions

Is cloud accounting cheaper than on-premise?+

Over five years usually yes for small and mid-sized companies, once hardware, IT time and upgrade projects are counted. Large customised deployments can be cheaper to keep on-premise.

Can on-premise accounting software be moved to the cloud?+

Yes, either by moving to the vendor's cloud version or a different system. Most vendors now steer customers that way: NetSuite has always been cloud, Sage and Microsoft push Intacct and Business Central over their desktop lines.

Who still uses on-premise accounting software?+

Larger manufacturers and public bodies with customised ERPs, regulated companies with residency requirements, and accounting firms with desktop compliance software.