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I like on-premise because it sounds better than on-premises. It, however, may not be correct grammatically in the following title (http://finance.yahoo.com/news/self-integration-premise-cloud-data-140000569.html):
Self-Service Integration of On-Premise and Cloud Data Made Easy with Progress Easyl
There is no such word on-premise in dictionary and premise has a total different meaning from premises. Below is copied from the link http://en.wikipedia.org/wiki/On-premises_software:
On-premises software (sometimes abbreviated as "on-prem" software) is installed and run on computers on the premises (in the building) of the person or organisation using the software, rather than at a remote facility, such as at a server farm or cloud somewhere on the Internet. On-premises software is sometimes referred to as “shrinkwrap” software, and off-premises software is commonly called “software as a service” or “computing in the cloud”. Within the context of cloud computing, the term "on-premise" is incorrect grammatical English, yet has become common place particularly with some of the cloud software vendors.
What do you think?
I agree with you that "on-premise" sounds better, and with the comment in Wikipedia that "the term 'on-premise'...has become common place.".
However, I see the point that it really means "on the premises" --- i.e. there is no singular "premise". I think it would be easier to go with the plural if it wasn't for the "double-S' sound). I will start referring to the "Data Direct On-Premises Connector" :-)
(Other similar words: Scissors, Googles, Pants, Clothes, Shorts, Trousers, Shenanigans, Smithereens, Remains, Suds )
A fun comment!
Of course, there is also a singular "premise" (refering to an idea or proposition). So your PREMISE that it is grammatically correct to refer to ON-PREMISES software is a good one.
 11 Nouns That Have Only Plural Form, Mental Floss