On-premises software (sometimes abbreviated as "on-prem" software) is installed and runs on computers on the premises (in the building) of the person or organization using the software, rather than at a remote facility, such as at a server farm or cloud - somewhere on the Internet. On-premises software is sometimes referred to as “shrinkwrap” software, and off-premises software is commonly called “software as a service” or “computing in the cloud”. Within the context of cloud computing, the term "on-premise" is incorrect grammatical English, yet has become commonplace particularly with some of the cloud software vendors.
The on-premises approach to deploying and using business software was the most common until around 2005, when software running at a remote location became widely available and adopted. The new, alternative deployment and use model typically uses the Internet to remove the need for the user to install any software on premises and had other accompanying benefits: running software remotely can result in considerable cost savings because of reduced staffing, maintenance, power consumption, and other factors.