On-premise vs. Cloud Product Information Management

On-premise vs. Cloud Product Information Management

Retail Tech Insights | Sunday, March 27, 2022

Both cloud and on-premise PIM deployments bring their own set of challenges and promises for various enterprises.

FREMONT, CA: Cloud-based software deployment has been around for a while now, as a method that allows enterprises to utilize software applications on a plug-and-play, subscription basis. It has caused a paradigm shift in the software industry – with its on-demand, pay-as-you-use model – and brought certain clear advantages for enterprise users. However, some enterprises still prefer on-premise software deployment due to data security, confidentiality, customizations, and overall cost issues.

What is Product Information Management?

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A Product Information Management (PIM) solution is a business application that provides a single place to collect, manage, and enrich their product information, create a product catalogue, and distribute it to their sales and e-commerce channels. A PIM solution makes it faster and more seamless to create and deliver compelling product experiences. PIM tools enable users to manage complex products efficiently. Companies introduce products that consist of a large number of combinations (such as an outfit consisting of pants, shirts and shoes) or variation possibilities (such as a T-shirt in different colours and sizes). The challenge is to manage these assets efficiently and subsequently be able to communicate them to various output channels. A PIM system allows a company to execute this in a streamlined manner.

Parameters to Consider When Selecting a PIM Solution

1. Cost: The most obvious benefit of cloud deployment is the significant cost advantage it entails. Not only does a company benefit from low setup costs, but maintenance costs are also considerably reduced as the cloud environments are often managed by PIM providers. The low cost of subscription allows small and medium businesses (SMBs) to rapidly scale their customer base since the cloud allows them to use high-end, expensive PIM software without having to bear the cost burden.

On the other hand, on-premise PIM deployments usually require significant investments, including the cost of software licensing, hardware, server, installation, integration, maintenance, and system upgrades. Add to that the cost of hiring and onboarding resources, training internal staff, integrating the PIM platform with existing applications, migrating data from legacy systems, and setting up processes and custom workflows. Apart from the initial upfront costs, on-premise PIM also entails additional costs of continuous upgrades and new plug-ins for customizations that ensure that the systems are always updated to meet the latest customer demands.

2. Data onboarding: Most of the data in a Product Information Management(PIM) system comes from vendors and suppliers. Onboarding this data can be cumbersome and time-consuming — with multi-level verifications, differing formats, and compliance checks for standards and regulations.

A centralised onboarding PIM software can ease this process significantly. It can normalise data by creating standard templates that vendors and suppliers can directly upload their product content. Apart from this, it can provide specific onboarding features to automate regulatory processes. If there has been a struggle with normalising and consolidating information from vendors, opt for a PIM tool that provides rich onboarding features.             

3. Security: Data privacy and security are the biggest concerns of any business leader when choosing a new software application. Although data breaches can happen in both on-premise and cloud PIM deployments, the company must make sure that its PIM solution ensures complete security for the product data at all costs. When using cloud-based PIM solutions, the safety of the data lies with the cloud provider. Being responsible for platform security, operating systems, networks, and infrastructure, most cloud solution providers ensure robust data security with universally accepted authentication protocols. Cloud providers are also investing in advanced techniques like encryption and key management, data-tracking, and purging to comply with international data privacy protocols.

Many enterprises prefer on-premise PIM software solutions over their cloud-based counterparts for high security and reliability levels. Highly-regulated large enterprises that deal with extremely sensitive information invest in on-premise PIM solutions for maintaining the integrity, confidentiality, and availability of their mission-critical data. As data is stored on proprietary, on-premises storage, an organisation can use a hardware security module to reinforce data encryption keys with a firewall. This adds a security layer to prevent hackers from de-encrypting stolen files even if they manage to hack the servers.

4. Speed

To succeed in today’s hyper-connected, omnichannel market, businesses need to be agile. As success is dictated by who gets to the market first, brands need easy-to-implement and highly scalable PIM solutions that enable them to be at the right place at the right time with the right products. A cloud-based PIM deployment ensures faster time-to-market by minimising all deployment-related hassles and disruptions that slow down implementation. By reducing the installation and configuration time, a cloud PIM solution accelerates time to value. As a PIM application is already installed, configured, and ready to use, it allows one to upload product data quickly, automate catalogue creation, and enrich it for multiple marketing campaigns.

On-premise PIM systems have to manage all responsibilities of hosting, installations, configurations, and maintenance. From understanding infrastructure requirements, securing organisational approval, and ensuring 24x7 data security to selecting the right resource and optimising costs, implementing an on-premise PIM is a time-consuming, labour-intensive project involving multiple stakeholders. Although on-premise PIM solutions allow greater control over data and enable high levels of customization, they require significant time investments for licensing, resource planning, equipment setup, system maintenance, and disaster recovery. 

At the end of the day, choosing the right PIM solution for a business depends entirely on its data management strategy and business goals. As the business requirements directly influence the selection of PIM deployments – on-premise or cloud-based - the company needs to weigh the costs, benefits, and associated trade-offs carefully to make the best decision that guarantees long-term success.

While on-premise PIM systems score high on data security, cloud deployments are quick to deploy and extremely easy to use. Also, the costs of upgrades are significantly lower than the traditional on-premise setups. From being substantially less cost-intensive to stimulating a culture of innovation, the benefits of cloud-based PIM will continue to maintain its dominance.

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