SaaS v. On-premises Software: Which One is More Green?


Market Analyst

In case you haven’t heard (or aren’t obsessively following IT trends like we are), the great trend in software is the evolution from traditional “on-premises” software (e.g. client/server software installed at the office) to Software as a Service (SaaS) (i.e. web-based applications that are managed in the vendors’ data center and accessed “on-demand” through a web browser).

Given what’s at stake for software companies in either camp, debating the merits of each model has led to some fiery discourse. We thought we’d fan the flames by introducing another angle: which model is “greener;” that is, better for the environment.

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Understanding the Models

On-premise software is what most people think of when they think of a software system. You pop in a CD or download a big file from the Internet and the install begins. Files are copied to your computer and/or a server machine, where they are stored and run. Because the client and server software components are both doing a lot of computations, a fair amount of power is required.

With SaaS, there is no local installation of software because the vendor manages all the code and the data in their data center. Users access the system through a web browser and its primary role is to present the user interface – not a very computationally intensive function.

On-Premise Energy Consumption

Now let’s dig into the power consumption of the on-premise model. We’ll use the example of a typical physician practice, since electronic medical records (EMR) software is a market we know well. The “On Premises” side of the graphic below illustrates a four-physician medical practice, running EMR software on their own in-house server.

The HP ProLiant DL server, one of the most commercially popular servers on the market today, will consume 7,008 KW of server energy per year. That’s running 24 hours a day, 365 days a year.

In addition, each user is using a Dell desktop 546, Dell’s most popular starter desktop. A single 546 Dell desktop will consume 600 KW of energy a year, running 8 hours a day for 250 days a year (an average work year).

A four-physician practice will consume 9,408 KW of power each year just to run EMR software on-premise. Each user will personally consume 2,352 KW of power each year.

SaaS Energy Consumption

Now let’s see how the energy consumption of SaaS software stacks up. Rackspace, one of the largest providers of cloud computing hosting services, lists the Dell PowerEdge 2950 III as one of it’s most popular server choices. And since a data center would have a redundant server in addition to the PowerEdge, our SaaS applications are powered by two of these servers.

Running 24 hours a day for 365 days a year, the total energy consumption for these two Dell servers running SaaS applications would be approximately 6,570 KW/yr each, or 13,140 KW/yr total.

However, in a modern SaaS data center there are economies of scale that enable the software vendor to run many customers on the same server (or small number of servers). The first way they might do this is to develop a “multi-tenant” architecture. That is, much like many people can share the same apartment building, SaaS customers can share the same software application and server. Extending the analogy, each SaaS user has their own passwords and permissions just like each tenant in an apartment building has their own set of keys.

Running this server in a SaaS data center allows the SaaS EMR vendor to tens or hundreds of customers on one server. When a new customer goes line with the application, the incremental computing requires – an power consumption – increase only marginally.

How does this affect energy consumption by our physicians?

Now our physicians are only using 131.4 KW (1/100th) of the Dell PowerEdge server energy each year because of the multi-tenant architecture. Also, because SaaS applications require less computing power on the client, the physicians are able to switch to more efficient Dell netbooks, which only consume 120 KW of power each per year.

Using SaaS, our four physician practice now only consumes 611.4 KW per year running their EMR software. That’s 152.85 KW per year, per physician.

That’s an 93% reduction in overall energy consumption for a four physician practice using SaaS EMR software over on-premise software!

Beyond Power Consumption

Power consumption isn’t the only area where we found that SaaS is greener than on-premises. Here are a few more considerations.

  • Remote IT support. Whether or not your IT support is in-house, they’re going to consume energy traveling to and from an office to perform maintenance and fix problems. Since there really isn’t much of anything to maintain at the office, SaaS vendors are able to provide remote IT support, reducing travel and CO2 emissions.
  • Less frequent replacement of PCs. Given that SaaS applications just require a web browser on the client machine, you really don’t need a very powerful PC. SaaS customers can keep their old machines in place or get a longer life from any new machines they buy. This compares to on-premises software, where customer will often upgrade hardware to support the computing resource requirements of new client software.
  • Telecommuting. Accessing on-premise software remotely is typically slower and more technologically complex than a SaaS application. With SaaS applications accessible from any computer with an Internet connection, employees can work remotely, saving fuel and energy costs in the process.
  • Karine Simard

    Interesting article! I think the savings, financial and environmental, make the SAAS option a serious contender to traditional Intranet applications.

    See my post on the subject:

  • Peter Cohen, SaaS Marketing Strategy Advisors


    I’ve often seen reference to the positive environment impact of SaaS, but it’s very useful to have you quantify that impact.

    SaaS providers should certainly consider adding these “green” benefits to their marketing messages.

    Peter Cohen
    SaaS Marketing Strategy Advisors

  • Anna Jaeger, TechSoup


    I really like the way you used a concrete example and quantified the power savings. One other green benefit is if hosting providers are using multi-tenancy, then fewer servers have to be built, maintained and recycled, which means far fewer raw materials are used and fewer toxics are released.

  • Zen Kishimoto

    Chris, good job.. Please see my blog about a related work done by NetSuite. Zen

    • Chris Thorman

      Thanks Zen. Nice write up!

  • Fabrice Cathala

    Chris, Great post!!!

    I particularly like the section “Beyond Power Consumption” which is so often forgotten…

    Fabrice Cathala
    SaaS Consultant

    • Chris Thorman

      Thanks Fabrice. We tried to cover all the angles!

  • Adam Bullock

    Really interesting perspective (which I haven’t seen explored before) and write-up, thanks!

  • Paul Giurata

    We also quantified the environmental impact of SaaS but not from the server energy consumption standpoint. Rather we looked at using a SaaS collaborative workspace enabled an individual company to significantly reduces its own carbon footprint. Specifically Catalyst Resources was able reduce its carbon impact footprint by 21,000 lbs of CO2 per month, while simultaneously reducing expenses and increasing billable activities by nearly 20%.

    So both on the server end of things and on the actual individual level, SaaS, because it enables remote work and collaboration, will play a significant role in reducing environmental impact.

    Hard numbers from our study our available at

  • Mike E.

    We looked at it as a ‘damned if you do, damned if you don’t’ proposition, with detractors on both sides & suitably imposing arguments. Our thoughts? Please both sides of the equation; an SaaS for those that see its merits – and – a local Server variant. A complete Solution (tables, queries, files, images, actions,pages, etc) – can be selectively bundled on either the SaaS or local server vsn – and restored in its entirety on the other platform. So instead of insisting that only one school of thought is correct, assume that both are correct.

  • Danny Johnson

    SaaSational post!

    I’ve been wanting to see something like this for a bit that shows the energy efficiency of SaaS. Very good to compare to on-premise.

    Thanks Chris.

    Stay SaaSy San Diego

  • Donna

    Hi Chris, good information!

  • Sree

    No doubt…SaaS is more green

  • Festus Aleogena

    Saas is clearly better, cheaper and greener but what about security and confidentiality of user’s data files

  • Cramer

    Definitely SaaS in my book, but it all really depends on how sustainable the provider is…If they are energy guzzling maniacs who aren’t even trying to reduce their footprint the problem hasn’t made any progress. Here’s a post I wrote about the 2 sides of sustainability and SaaS.

  • SaaS

    Great post. I like the power consumption part of the post. This is not often considered in posts about the advantages of SaaS and the cloud. Thanks.

  • MediTouch EMR

    SaaS, Web-based EMRs are obviously cheaper, more versatile, and definitely greener.  The lack of in-house servers alone erases a physical and electrical footprint.  SaaS EHRs can function on current and new technology, so there is nothing to replace if not needed.  SaaS and the Cloud are the future for all technology, not just EMRs — the days of bulky in-house data servers are quickly becoming a thing of the past. 

  • MediTouch EMR

    SaaS, Web-based EMRs are obviously cheaper, more versatile, and definitely greener.  The lack of in-house servers alone erases a physical and electrical footprint.  SaaS EHRs can function on current and new technology, so there is nothing to replace if not needed.  SaaS and the Cloud are the future for all technology, not just EMRs — the days of bulky in-house data servers are quickly becoming a thing of the past. 

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