Updated: Dec 22, 2021
Notably, the cloud point of sale market promises to grow up to $9 bn by 2026.
I confess: my professional quirk is blossoming. When visiting a store, restaurant, or gas station, I usually pay attention to a point of sale system: its brand, speed, etc. Involuntarily, I ask myself: is it on-premise or cloud? Is it convenient for employees? It's enough to analyze a cashier's behavior, and all becomes clear.
I bet that retail and HoReCa managers think and do the same way. They often need to choose between cloud and traditional POSs for their enterprises. Observation makes a choice easier. But it requires time and a versatile experience.
Thank God you have an option. Here you'll find everything about both types of POS in one box to make a quality comparison.
All You Need To Know About Traditional POS Systems?
What is a Point of Sale 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.
Traditional POS definition
You might call it traditional or on-premise POS. Anyway, it will continue to operate on a closed network basis. Here all the information is saved on a local server, usually situated inside a store or restaurant building.. This kind of POS allows a limited opportunity to access the contained data. It works like a regular desktop. So, the user can get information only using a limited range of connected devices.
Pros & Cons
At first glance, a local POS system seems a bit outdated. Come on, in our Work from Homeworld a limited data access is an obstacle for business development. Nevertheless, it has a couple of significant advantages that make it still popular in post-pandemic conditions. Among them:
Reliability and data safety
Traditional POS systems are bulky. So, equipment and stored data are difficult to steal and use for illegal purposes.
If the power goes out, generators will provide a steady Point of Sale system's work in any location and conditions. It also can operate without coverage.
No additional fees
You can host a countless amount of information and access it whenever you need without any data hosting fee.
Meanwhile, several drawbacks often make companies measure seven times before on-premise POS purchases. They include:
Traditional Point of Sale system's components are changed manually on-site. Frequent interference interrupts a business activity at all. That's why the renovation is held only 1-2 times a year. That’s why a company can’t respond to environmental changes immediately. It has to wait for an update.
Limited data access
Yes, it’s an advantage when it comes to information theft. In reverse, it's a weakness since employees can’t receive up-to-date data and use the system from any part of the world.
What Kind Of Business Does Choose It?
Oddly enough, but some industries still prefer strictly traditional POS systems. Companies supplement Points of Sale with various services and modern components supporting reliability and allowing POS to perform vital business functions. For example, to gather and process customer experience & behavior data to become more client-oriented.
Among the businesses that use on-premise solutions, the first place is occupied by the gas stations industry. Here, a non-stop entire station mechanism operation is a priority. This POS allows fuel stations to work equally well downtown and on the roadside. Besides, this domain needs reliability and data security since it generates tax reports on the excise goods sale..
One more industry that likes to buy traditional Points of Sale is retail. Although some of its representatives, like Amazon and Walmart, decided to abandon POS systems at all by implementing smart shopping carts. Anyway, every second mid-sized or large chain of stores uses on-premise software, as it enables them to serve customers regardless of the external circumstances. Due to generators, the cash desks can 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 POS definition
Cloud technology remains one of the top tech trends in 2021 and will be there in 2022. That’s why companies strive to migrate to the cloud and begin a journey with Point of Sale systems.
Once Paul Maritz, CEO of VMware said, "Cloud is about how you do computing, not where you do computing." It’s the best explanation of the core distinction between on-premise and cloud POS I’ve ever seen.
Cloud POS is the boosted version of a traditional Point of Sale system. It 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 through any device: PC, smartphone, laptop, etc.
Pros & Cons
Here the Point of Sale equipment is portable, and data is 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:
Components updating doesn't require on-site activity. The solution is improved remotely, while a user automatically switches to a new product's version. The system renovation occurs every few months.
Often it's limited only by devices for accessing the cloud. The main servers are situated outside restaurants, stores, or other business spaces.
Real-time data exchange
This feature helps to get as many customer details as possible and provides tips for their proper usage, like CX improvement, increasing marketing campaigns quality, etc.
Cloud systems can process countless amounts of data without distortion and loss.
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.
As seen, cloud Point of Sale has many significant benefits. But there are also several disadvantages, for example:
Dependence on coverage
Cloud POS is reliable, but if a device loses an Internet connection, it's impossible to continue working with the system until it appears.
Information stored on the cloud is secured. Meanwhile, there is a more real risk of data theft than when using an On-premise system.
What Kind Of Business Does Choose It?
Choosing between cloud-based vs. server-based POS, the HoReCa domain prefers the first one.
Cloud technologies allow fast data transfer. It makes internal processes more efficient and service - better. Due to a cloud Point of Sale, restaurant waiters can take orders quickly and accurately, instantly transmitting the received information to a kitchen. In this way, cooks find out about an order to prepare a new dish for table number X. It would be difficult to build such processes using a traditional POS.
The most popular cloud Point of Sale solutions are: Toast, Shopify, Vend.
No third possibility?
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 through any device. Information is stored on remote servers (on a cloud).
Users often compare these POS systems, trying to find the perfect solution without cons. It already exists and is named a hybrid POS.
Hybrid POS definition
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.
Still have questions? Drop us a line and discover what POS system will suit your business.