It’s no secret that choosing a POS system for your retail business is a big decision—the right system can propel your business forward, while a bad fit can be a disaster. When researching your options, there are many things to weigh up, from cost and capabilities through to reporting and support. You’ll also need to make a decision around a cloud-based or on-premise solution. Is one better than the other? Or more suited to a particular type of business? And what about a hybrid solution?

These are all great questions! While there’s a growing misconception that on-premise is old news and it’s now all about the cloud, this is certainly not the case. There are some very important features of on-premise POS solutions that so far can’t be replicated in the cloud. Having said that, the cloud also has certain functionalities that on-premise may lack, so make sure you look closely at the capabilities and limitations of both to find the best match for your needs and budget.

In this article we share an overview of the pros and cons of cloud and on-premise POS to help you find the best fit.

Pros of on-premise POS

Not reliant on the internet: If you’re running a cloud-based POS, any interruptions to your internet service or issues with speed will directly impact your ability to process sales. Because on-premise POS solutions are not reliant on the internet, they offer a much higher level of reliability and less chance of downtime.

Physical control of your data and system: When you have an on-premise POS solution, you have complete control over how your valuable data is handled. You can decide how and when your system performs back ups, who has access to what and how your POS is managed. This is not always possible when you opt for a one size fits all cloud-based solution.

More functionality: With an on-premise solution, you can customize your POS entirely to suit your needs. This allows you to create a system that ticks all your boxes and integrates seamlessly with all aspects of your business, from inventory and ordering to ecommerce and reporting, so you can operate at maximum efficiency.

Cons of an on-premise POS

Investment in hardware: With an on-premise solution, there will be an initial capital investment for the hardware required to run your system. However, keep in mind that depending on the size of your business and the amount of capabilities and storage you require, when you calculate the costs over time, on-premise could still be the more cost-effective option in the long run.

Dedicated space needed: If you are limited in space, an on-premise solution may not work as it does require a dedicated area that can be used permanently for the hardware.

Potential for loss in case of disaster: Because your system is physically present on site, if there is a disaster such as a fire or flood, there’s a chance it could be damaged or data lost. This risk can be minimised if you choose a hybrid system that includes an on-premise POS with cloud-based storage (more on this soon).

Pros of a cloud-based POS

Access anywhere: With a cloud-based POS you can manage your system easily from any connected device. This is handy for managers who work across multiple locations or remotely from home. Having your data in the cloud also minimises the risk of total data loss in the event of a hardware failure.

Scalable and flexible storage: Another key benefit of cloud solutions is their ability to adapt the size of your storage capacity to match the changing needs of your business. Most are subscription based, and should give you the option of increasing or reducing your storage as needed.

Remote access: The ability to access live sales and reporting information from anywhere on a connected device means you can stay in the loop at all times, even when you can’t be physically on site.

Cons of a cloud-based POS

Reliant on internet: As mentioned above, with a cloud-based solution, if you lose the internet, you lose the ability to process sales. Depending on the size of your business and timing of the outage, this can cost you a significant amount in lost sales, not to mention a crowd of unhappy customers.

Unable to customise: While you may be able to pick and choose your functionality to a degree, a cloud-based system is less likely to be able to incorporate specific customisations that your business may want or need to operate optimally.

Lack of responsive support: Most cloud-based systems have limited customer and technical support, and the chances of them being located in your time zone are slim. If something goes wrong and you need immediate help, it may not be available.

Difficulty accessing data: Data backup systems may be limited or non-existent and you are totally reliant on your cloud POS provider to manage backups on your behalf. If you decide to upgrade your POS system down the track you may not even be able to fully extract your existing data for a smooth transition.

How about the best of both worlds?

If you’re still on the fence and dreaming of a third option, where you could handpick the best elements from on-premise and cloud to create a bespoke POS that does it all, you’re in luck, because you can!

A hybrid POS solution has elements of both on-premise and cloud to provide optimum reliability, function and flexibility. In most situations, we recommend a hybrid solution consisting of an on-premise POS system in combination with cloud-based storage, as this provides the most flexible, reliable and efficient way to manage a fast-paced retail environment.

If you’d like to know more about our hybrid POS solutions, we’d love to chat to you about your options. Contact our Melbourne-based team on 1800 864 839 (Australia) or 0800 864 839 (New Zealand), or click here to book a 15-min discovery call with a senior member of our team to talk about your requirements in depth.