With the dawn of cloud and Software-as-a-Service (SaaS) and the rapid adoption among enterprises, there’s one thing that may come as a surprise: on-prem sales and demand are rising, and modern software companies are offering more enterprise delivery options than ever before.
In this series, we’ll explore the results of The State of On-Prem: Modern Solutions for a Traditional Problem, a new report from Replicated and Dimensional Research.
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While it may be popular to believe that “cloud is king” and SaaS is the best and most in-demand modern enterprise software, data shows that demand for on-premises software is equally as strong. It’s the smart choice for customers operating under security, regulatory, and compliance requirements; many organizations cannot allow their customer data to be shared in multi-tenant environments. Additionally, software companies that do not currently provide an on-premises solution to customers leave money on the table and miss a significant business and competitive opportunity.
The recent survey from Dimensional Research includes feedback from 405 business and technology professionals at executive and manager seniority levels, representing software companies of all sizes around the world. The qualified survey participants were asked a series of questions about their company’s software delivery options and use of containers with the goal of better understanding the current use, need, and challenges for on-premises software delivery, as well as investigate the adoption of container-based applications and the use of Kubernetes.
In this article, we’ll explore some of the takeaways from this report that indicate customer demand for on-premises software is rising, and adoption among enterprise software customers are leading to high satisfaction rates.
Of the companies surveyed, 92 percent indicated that their on-premises software business has grown over the past five years, with 50 percent reporting strong growth. Conversely, only three percent of companies reported that their on-premises software sales have decreased over that same time.
This illustrates that not only are on-premises solutions still in demand but have prominently grown as more options for delivery become available. The need for a single-tenant option, be it traditional on-prem or private cloud, is in high demand for enterprise software customers.
Respondents also reported that customer demand for on-premises software equaled that of public cloud offerings. Customer data center and private cloud deployments were requested at the same volume as public cloud options (AWS, Azure, Google Cloud, etc), and 34 percent confirmed they also shipped air gapped deployments, further demonstrating the demand for data security and strict governance with security-sensitive customers. Additionally, among those running on-premises software, 91 percent noted proven customer satisfaction.
These responses are significant in that on-premises software was often thought to be more challenging to maintain and update, but with modern solutions, much of the friction has been removed and automation has made it easier than ever to meet customer needs before an issue arises. With that, nearly ALL of the companies surveyed have expanded their business and increased revenue streams with on-premises offerings. They’re also getting just as much business from customers needing on-premises options as they are cloud, and with that offering, customer satisfaction is high.
To further support this, one of the most telling pieces of data from the survey is that over 50 percent of respondents’ revenue came from on-premises software deployments, and 54 percent noted that over half or more of all software sales were deployed using on-premises solutions.
This is not to say cloud isn’t the right choice for some or is even going out of style, instead, this is further proof that foregoing an on-premises solution for your software automatically decreases your total addressable market, especially with security and data governance top of mind for so many customers.
This report has brought to light several important indicators of the state of on-premises adoption and retention across enterprise software vendors and customers. In the coming series, we’ll discuss the proliferation of containerization and Kubernetes, as well as many of the issues that plague modern software companies when it comes to reliably deploying and maintaining software on-prem.
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