On-premises software (often abbreviated as on-prem software, and also often incorrectly called “on-premise” software) is installed and run on computers on the premises (in the building) of the person or organisation 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”.
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.
Since the advent of software run remotely, on-premises software has sometimes come to be called “old-style” software, although it is still the preferred model in some industries such as banking, finance, and defense, where the ability to supervise and secure data on premises that are locally owned or controlled is required.
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