This specific type of system involves the installation and operation of payroll management applications on a company’s own hardware infrastructure. This contrasts with cloud-based solutions where the software and data reside on a vendor’s servers. For example, a company might purchase a payroll software package, install it on their internal servers, and manage all aspects of its operation, including data storage, security, and updates.
Historically, this model was the dominant approach for payroll processing, offering perceived benefits of control and data security, especially for organizations with strict regulatory or compliance requirements. Further benefits included customization options tailored to unique business processes, and the avoidance of recurring subscription fees associated with Software-as-a-Service (SaaS) offerings. This approach also supported the integration with existing legacy systems.