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Cloud vs. On-Premise: How to Gain the Right Footing for an Enduring Benefits Strategy

When has change never been a consideration in benefits and healthcare? While that may seem like the setup to an unfunny punchline, it’s a reality for everyone in the industry, and even more so for HR and benefits teams operating in the public sector.

The layers of complexity compound for those in the public sector, making administering large-scale benefits programs feel like climbing up a mountain that continues to steepen. It involves satisfying ever-changing legislative directives, pressure to create competitive benefits programs and the need to control costs all while delivering benefits to, not only a population of active employees and their dependents, but oftentimes retirees as well.

Further, organizations and institutions in the public sector have the charge of being good stewards of the public’s dollar, which is often a limited resource. Those entities must be smart about how it’s used.

So, now at the summit of the mountain, all of the priorities and complexities lay on the path behind. But to carry that load down the other side of the mountain requires a very different approach. This is where many public sector entities find themselves today and where they face a choice.  

Benefits modernization and optimization in the public sector requires a technology investment. When considering a technology investment for a public sector entity, it’s an understatement to say that it commands a substantial amount of work to drive that change. Not to mention, making the wrong decision comes at a heavy price with the potential to impact the next five, or even 10 years of being saddled with a solution that doesn’t meet your needs.

So, the decision ultimately becomes – should we explore a benefits technology solution that’s on-premise or cloud-based?

In the south, there’s a common saying, “if it ain’t broke, don’t fix it.” For a long time, on-premise software – installed on a company’s own servers and behind its firewall – was the only offering for organizations. But technology decisions need to support the reality of the business, and the reality is that technology needs to be flexible to meet the needs of a future that you can’t write down in requirements today.

Let’s take a look at the advantages of a cloud-based approach to employee benefits, an approach that’s been adopted successfully by many functional areas across organizations in the public sector already.


When developing an RFP, the list of requirements is extensive and often complicated. While essential to address the complexity you face, it’s based on requirements that are static in time, but the truth is that your requirements can and will evolve.

So, if the foundation the technology is built on is focused only on those static requirements, you’ll find yourself in a position where the technology becomes obsolete. Rather, you should feel empowered knowing that as requirements change, the technical infrastructure base can evolve with your organization in the future.

That type of forward-thinking, long-term growth can only happen in a cloud-based model where configuration flexibility allows for adjustments to happen quickly, efficiently and without added cost or risk.


Speaking of costs.

Costs associated with managing and maintaining an on-premise solution can be exponentially higher than a cloud-based environment, and those costs fall directly on the financial statements of the organization or institution. On-premise setup requires everything from the server hardware and software licenses to having IT staff on hand to support and manage potential issues. That doesn’t factor in the costly and time-consuming process required to upgrade or costs around maintenance when hardware breaks.

In a cloud-based model, there are no capital expenses and you only pay for the resources you use with the added benefit that the cost of innovation and upgrades within the platform don’t fall solely on your shoulders.

Configurable & Scalable

Organizations and institutions in the public sector are administering complex benefit programs at a large scale. Gaining flexibility with a configurable and scalable platform can help you move faster on your goals.

When it comes to configuration, the benefit of a cloud-based solution is that it features near-instant provisioning, meaning that once new features and functionality are launched they’re also ready for users to access on the platform. Plus, updates are automated, meaning the software remains current, highly functional and compliant. This is where future-proofing your benefits strategy comes into play and having the capacity to deliver on those requirements of tomorrow that you simply aren’t able to articulate today.

The other benefit is increased scalability, which is especially important when thinking about points in time like peak annual enrollment season or, more broadly, potential expansion of your organization. The reality is that an on-premise solution is less scalable. For example, if you need more bandwidth or users, you may have to invest in more servers. Let’s say you’re a university system that’s onboarding a new campus location with hundreds of employees. That expansion is seamless on a cloud-based platform, which is imperative when it comes to employees’ access to their benefits. Plus, software releases are automatically applied on a regular cadence, without any requirement to download, install or go through a process to “upgrade” to the latest version. 

Data Access, Integrity & Security

Moving data and processing to the cloud, as opposed to on-premise, enables businesses to move faster. So, if your goal is to expand and streamline employer interactions and data access while increasing data quality, then a cloud-based solution can provide those benefits.

We can’t discuss on-premise versus cloud-based solutions without addressing one of the most principle topics – security. When you’re dealing with personal information, one of the most important considerations in any technology solution is whether your sensitive information will be secured.

Yet, while the inclination may be to automatically turn to a hosted solution, it’s important to consider that you can still get data security through a cloud-based solution, while also taking advantage of all of the other financial and technical benefits it can provide. With any technology solution, it remains that selecting a proven, trusted partner goes part and parcel with security.

When it comes to a cloud-based solution, that partner should have a dedicated security and compliance team with documented philosophies on data security incorporating third-party auditing and encryption of data. If you choose a partner that takes this approach, it shows a commitment to the security of group information under any circumstance.

Through proper vetting and selection, a cloud-based provider can meet your security needs, while also helping you deliver on the mission of your organization through benefits optimization.

A Sustainable Solution

Ultimately, to achieve all of your organizational goals and navigate the pressures faced in the public sector, what’s required is a sustainable solution – one that can evolve with you. Letting a modern, cloud-based benefits platform do its job means that HR and benefits teams can redirect their time to more strategic initiatives.

Get the Guide to Benefits Modernization in the Public Sector for a detailed view of the specific functionality and criteria to consider to help you best evaluate and differentiate your vendor options.