What to Choose: SaaS Solutions or On-Prem? Determining the Right Deployment for Business Bots

June 28, 2023

6 min read

Alexandra Khomenok

SaaS vs. on-prem business bots


It is generally believed that deploying a solution within one’s own infrastructure is more reliable and secure. However, hundreds of companies connect AI assistants online and are satisfied with the results. So, let’s compare SaaS and on-prem business bots and which deployment model is better. 


In this article, you will learn:

  • The differences between SaaS solutions and on-premises options for business bots.
  • How to deploy a digital assistant on different hosting platforms.
  • The security considerations for both approaches.
  • Is the cost of on-premise solutions always higher?
  • Find a handy cheat sheet for those who are unsure.


Software as a service (SaaS) is a software usage model in which a software vendor hosts the software application and makes it available to customers over the internet or an API.


Cloud infrastructure and platform services in general are the fastest-growing segments of the cloud market, and SaaS remains the largest by end-user spending. Gartner forecasts that SaaS spending will grow 17.9% in 2023, reaching $197 billion.


On-premise refers to the model where the software application is installed and hosted on the customer’s local server.


SaaS solutions are typically cheaper and easier to launch. Often, a SaaS solution is an opportunity to try a new product without incurring significant expenses. As a result, you don’t have to spend time on installation, management, or software updates—the integrator takes care of all of that.


But each method has its pros and cons. There is no one-size-fits-all approach that suits everyone. Let us explain how to choose the optimal hosting for deploying your AI solutions.



Cloud chatbot. A cloud chatbot is hosted on the service provider’s premises, and users access them remotely. Working with a cloud solution is possible at any time and from any location.


There are three main types of cloud deployment: public, private, and hybrid.


In a public cloud deployment, the integrator provides users with access to their own solutions. Often, the integrator is also responsible for managing, maintaining, securing, and updating the cloud chatbot.


With a private cloud deployment, the client gains access to their own cloud ecosystem, where they can independently manage solutions and configure security protocols.


A hybrid cloud deployment involves using both private and public clouds simultaneously. Users decide how the two services interact with each other, especially in terms of ensuring data security during transmission between them.


On-prem bot. Here, the conversational solution is deployed on the company’s internal hardware. The company can modify its IT infrastructure to meet the implementation requirements of the conversational solution. The responsibility for maintaining the solution and all associated processes can lie with either the company or the service provider, depending on the terms specified in the contract.



Cloud chatbot. Cloud chatbots are relatively easy and cost-effective to configure. They can be easily embedded into typical systems and seamlessly integrated into the chosen channel, such as a website, social network, messenger, or mobile application. However, the settings for cloud solutions are standard, so they may not always be suitable for specific purposes.


On-prem bot. On-premise bots allow for deploying a chatbot with specific infrastructure requirements. For example, if a company has its operating system or SIEM system, there may be certain security limitations that need to be taken into account. On-premise solutions also enable flexible configuration of user identification, adding new user features, and integrating it with other systems. Such a solution is more independent, as technical support and maintenance can be provided within the company. The service provider is only involved when necessary.


Control and Security

Cloud chatbot. Before choosing this option, it is important to clearly define all security protocols with the integrator. This includes who will have access to the personal data of customers, partners, or employees; how it will be protected from leakage; and how its confidentiality will be ensured during scaling or updating the solution. For example, you can set up access to the solution through a VPN channel.


On-premise bot. This solution allows you to control all your data and ensure its security. Businesses with sensitive information usually prefer deploying on-premise chatbots. This approach is most commonly used by companies in the medical, fintech, or government sectors.


Advice: It is important to remember that even an on-premise bot does not have 100% protection. However, you can organise a system of data and infrastructure access to minimise the risks of data loss.



Cloud chatbot. Cloud chatbots typically offer multiple pricing plans. Each plan is composed of several factors, such as the number of users, functionality, usage time, etc. Usually, you are offered a subscription for several months or a year in advance. The subscription often includes all updates and maintenance.


On-premise bot. The cost of an on-premise bot is usually higher than a cloud solution. The contract can include optional technical support and training for the client. The higher cost is offset by lower expenses in the future. You can maintain the solution with your own resources without outsourcing. However, this only makes sense when you have multiple services deployed. In that case, maintaining your support team becomes cost-effective.


Here is a table that summarises the cost of cloud and on-premise chatbots:


Feature Cloud Chatbot On-Premise Bot
Initial cost Low High
Ongoing cost Low High
Flexibility High Low
Security Good Excellent
Control Low High

Where is it better to deploy a chatbot: SaaS or on-prem?

Choose the solution that is most advantageous for your business based on its characteristics. Some AI solutions are designed to work exclusively in a cloud environment, while there are complex chatbots that can only be installed on-premises. If the majority of your IT infrastructure is installed on-premises, it would be more logical to host the chatbot on your server. An additional advantage of this solution is that all customer dialogues, transactions, and personal information remain entirely within the company.


Many companies, due to historical reasons or increased data security requirements, prefer to maintain control over their IT infrastructure. On-premises installation of technologies is one of the most popular requirements for enterprise-level companies. When implementing voice projects, customers in the financial, retail, and insurance sectors consider what data will be used in the customer’s dialogue with the bot, such as name and address, financial, or other sensitive information. Tovie AI chatbot and voice bot solutions are designed for installation both on-premises and in the cloud.


The choice between SaaS and on-prem business bots should be based on several factors, including cost, scalability, control, security, and maintenance requirements. SaaS solutions are flexible and affordable, making them an ideal choice for companies that require quick deployment and scalability. On the other hand, on-premises solutions provide full control, convenient customisation, and high security. They are in demand in sectors with sensitive information.


In any case, the choice between SaaS and on-prem bots depends on the individual business requirements of companies. Today, many clients adopt a hybrid approach, using both SaaS and on-premises solutions, which allows them to optimise their infrastructure and address the implementation needs of different types of software.


Cheat sheet for choosing between SaaS and on-prem business bots

Feature SaaS On-Premise
 Accessibility and scalability  Easy access to the solution and the ability to scale as needed.  May require more IT resources to manage and scale.
 Cost  Typically offered at a lower cost, often based on a subscription model.  An upfront investment is required for infrastructure setup and implementation.
 Updates  Regular updates and maintenance are handled by the service provider.  You are responsible for updating and maintaining the solution.
 Support  Support and maintenance are included in the subscription.  You may need to hire an IT team or outsource support.
 Control over the solution  You have less control over the solution and its customisation.  You have full control over the solution and its customization.
 Data security  Data security may be less robust than on-premises solutions.  Enhanced data security and compliance with internal requirements.
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