What Is The Difference Between A Traditional And Cloud-Based Point of Sale Systems?
Updated: Jul 6
Grand View Research warns: global POS market revenue will hit from $ 9.3 bn in 2020 up to over $18 bn by 2027. Notably, the cloud point of sale market promises to grow up to $9 bn by 2026. It seems that in the cloud based POS vs. traditional POS struggle, the first one will win by a small margin. But do not rely solely on statistics. Choosing cloud or non cloud based POS for business, you should know what software your competitors prefer and why. This research will help you make the final decision.
What Is The Traditional POS System?
The POS system is a set of equipment and software that conducts transactions and transfers information about taxable operations to the government authorities. Also, POS has many other tasks, depending on the area of business in which it operates.
Definition and Features
Traditional, On-premise, or Legacy POS systems are the same Point of Sale approach's names, operating on a closed network basis. Here all the information is saved on a local server, usually hosted in the place of business activity. This POS allows a limited opportunity to access the contained data. It works like a regular desktop. So, the user can get information only using the computer.
Pros & Cons
Thus, the local POS system seems a bit outdated. Nevertheless, it has significant advantages, because of which the solution remains popular to this day. They include:
Reliability and data safety. Traditional POS systems take a lot of place because of their bulk. It can be an issue when they have to fit in a small space. Contrastingly, the equipment and stored data are difficult to steal and use for illegal purposes.
Independence from external factors. If the power goes out, generators will provide a permanent Point of Sale system's work.
Ability to function everywhere. The system operates without coverage, so its location doesn't affect the running quality.
However, several notable downsides often make companies turn away from the purchase of an On-premise POS. For instance:
Flexibility absence. Legacy Point of Sale system's components are changed manually on-site. It means that frequent interference interrupts a business activity running. That's why the renovation is held no more than 1-2 times a year.
Limited data access. Yes, this is a plus that prevents information theft. In reverse, it's a shortcoming because it's impossible to receive up-to-date information and control the system from any part of the world.
Why Business Chooses It?
Oddly enough, in the world of permanent digital changes, some industries prefer strictly Traditional POS systems. But it does not mean that they operate in an original form. Companies supplement Points of Sale with various services and modern components that support the reliability and allow POS to perform vital business functions. For example, to gather and process information about customer experience and behavior to become more client-oriented.
Among the businesses that use On-premise solutions, perhaps the first place is occupied by the gas stations industry. For it, the non-stop entire station mechanism operation is a priority. Legacy POS allows it to work equally well in the city center and on the roadside. Besides, this business needs reliability and data security since it generates tax reports on the excitable goods sale, safely stored.
Another type of business that likes to buy Traditional Points of Sale is retail. Following the Hospitality Technology data, 61% of merchants want to buy Cloud POS systems. But every second large chain of stores uses On-premise solutions, as they enable them to serve customers regardless of the external circumstances. Due to generators, the cash desks will continue to work without power.
The most common On-premise POS systems are NCR Counterpoint, InfoGenesis POS, Paladin POS.
How Does A Cloud Based POS Software Look?
"Cloud is about how you do computing, not where you do computing." Paul Maritz, CEO of VMware
Definition and Features
Following Statista, as of 2021, hosting, storage, and computing cloud market revenue will be USD 162.8 bln. Not in vain, because cloud technologies are a trend now. Cloud POS is the same Point of Sale system, which might be cloud-based or cloud-hosted. In the first case, the POS system is designed for a cloud environment and used on a subscription basis (SaaS). In the second one, the Point of Sale is custom-developed. It's often on-premise, but all business data is stored on remote servers, managed by an outsourced vendor or internal IT team. Anyway, in both cases, employees can access information from any device: a work computer, mobile phone, etc.
Pros & Cons
Here the Point of Sale equipment is portable, and data are accessible from anywhere due to cloud technologies. These traits are its advantages. The system is also worth to be purchased because of the below pros:
Frequent updates. Components updating doesn't require on-site activity. Thus, the solution is improved remotely, while the user automatically switches to the new product's version. The renovation of the system occurs every few months.
A small amount of equipment. Often it's limited only by devices for accessing the cloud. The entire main complex is concentrated outside the sales point like a restaurant, tiny store, or other business space.
Information transferring in real-time. This feature helps to get as much customer details as possible and provides directions for their proper usage: for client experience improvement, increasing the marketing campaign quality, etc.
High Scalability. The system processes a countless amount of data without distortion and loss.
Reasonable price. Talking about SaaS systems, their subscription price is relatively low-cost. Moreover, the customer doesn't need to pay for updates, software repairs, etc. While a custom POS solution always needs an investment.
Cloud Point of Sale has many significant benefits, but there are also several disadvantages, for example:
Dependence on coverage. POS moved on Cloud is a reliable approach, but if the device loses its Internet connection, it's impossible to continue working with the system until it appears.
Data protection. Information stored on the cloud is secured. However, there is a more real risk of data theft than when using an On-premise system.
Which Business Does Choose It?
It seems that Cloud Point of Sale is a progressive solution. However, due to its dependence on external factors, gas stations, and retail industries prefer this instrument's traditional version. Nevertheless, choosing between cloud-based vs. server-based, the HoReCa sector quite actively buys the first one. Cloud technologies allow fast data transferring. It makes internal processes efficient and service better. Thanks to Cloud Point of Sale, restaurant waiters have the opportunity to take orders quickly and accurately, instantly transmitting the received information to the kitchen. In this way, cooks find out about the necessity to prepare a new dish ordered by table number X. It would be difficult to build such processes using a Legacy POS.
The most popular Cloud Point of Sale solutions are Toast, Shopify, Vend.
The Bottom Line
Following the way of data storing and accessing them, Point of Sale systems are divided into Traditional and Cloud ones. In the first case, the information is placed on a server located on the business premises. Access to such data is possible only through devices directly connected to the server. The Cloud POS system is portable and provides easy data access. Information is stored on remote servers (on a cloud). Employees can manage such Point of Sale from any gadget and place.
Users often compare these POS systems, trying to find the perfect solution without cons. It already exists and is named as a hybrid POS. It's the result of the On-premise and Cloud solutions combination. Here data stores both on cloud and local networks. These systems are also resilient to external circumstances such as lack of coverage or power loss. The most common hybrid Points of Sale are Revel, TouchBistro, EPOS.
Answering the question, which systems are suitable for different business types, JEVERA highlighted the trends of choice. Anyway, enterprises should proceed exclusively from their needs and development plans, purchasing the POS system.