SAP Web Ide for development is one of the greatest tool that SAP has created for UI5 development on cloud. Yet It is possible to connect ERP back-end with HANA Cloud Connector it's not possible for most of corporation who block access to their back end SAP system for reasonable concerns. In addition to this, for most of the companies storing the application code on cloud still seems uncomfortable. Now, it's possible to overcome these difficulties using SAP Web Ide with local installation and connect to your back end in the same network. Unfortunately it's still not advised to use as productively but I am sure in a year we can be using local Web Ide for also productive purposes.
Before going in detail first I would like to say that if you have a network access with strong security policies, you will face with some difficulties. Also I recommend to have an admin account. Also, SAP Web IDE is an eclipse based application if you had experience with eclipse it would be helpful. With "based on eclipse" I don't mean the user interface but backend.
Let's start!
1.Install the Local Web IDE
First things first. In the following blog post it's very well defined how to do installation. Just follow the steps 
How To Install SAP Web IDE Locally for Trial in Windows
2.Configure Proxy
Open the file eclipse/orion.ini and write the following lines
-Dhttp.proxyHost=<your_http_proxy>
-Dhttp.proxyUser=<your_proxy_user>
-Dhttp.proxyPassword=<your_proxy_password>
-Dhttp.proxyPort=<your_proxy_port>
-Dhttps.nonProxyHosts=localhost
-Dhttps.proxyHost=<your_https_proxy>
-Dhttps.proxyUser=<your_https_proxy_user>
-Dhttps.proxyPassword=<your_https_proxy_password>
-Dhttps.proxyPort=<your_https_proxy_port>
-Dhttps.nonProxyHosts=localhost
3.Configure Destinations
If you want to connect to your SAP ERP backend the easiest way is to use Hana Cloud Connector. However, if you are in an environment where these type of access is restricted, you have to configure your backend connection manually. Unfortunately, unlike in Hana Cloud Platform destinations can not be added via user interface. You have to create configuration files. To do so:
1. Go to directory "eclipse\config_master\service.destinations\destinations" where you have unzipped the local web ide folder.
2. Create a file with your backend name
3. write the followings inside the configuration file:
#ServiceDestinations
Description=<your system description> Type=HTTP
TrustAll=true
Authentication=NoAuthentication
Name=<your system name>
ProxyType=Internet
URL=https\://<your system url>
WebIDEUsage=odata_abap,ui5_execute_abap,dev_abap
WebIDESystem=<your system name>
WebIDEEnabled=true
sap-client=<your client>
For more information about configuring backend please see SAP Web IDE Developer Guide section "3.3 Optional - Connecting Remote Systems". One important point is here that SAP Note 1977537 must be applied on your backend. Otherwise you will get an error. For more information about this topic have a look at this blog:
Troubleshooting Deployment to an ABAP System from SAP Web IDE
- A "forbidden" error is displayed with no prompt for user credentials because the ICF node for ADT is configured with fixed user credentials. The solution would be to remove the fixed user credentials. This can also occur during the deployment process and result in an "CSRF token validation failed" error. Example: CSRF token validation failed while deploying extended fiori application to ABAP Repository
3.Using Git
This was the most problematic part in my Local SAP Web IDE installation. I guess it's about my proxy settings and you will not have this issues.
First I tried to clone a repository in our network. When I try to clone a repository in our network I got authentication not supported error.
When I checked back at the help document I saw that server certificate must be imported to the JVM. So, If you are using git on your network you have to the same thing. See Section 4.4.3 Importing the Git Server Certificate into the JVM in developer guide.
If you are connecting to a Git server in your company via HTTPS, the Java Virtual Machine (JVM) on which the
Orion installation is running has to trust the server certificate. If the server certificate is not issued by a public
agency, but is based on a company internal root certificate, you have to import the root certificate into the JVM.
Otherwise the verification of the Git server's certificate fails and prevents you from performing Git operations.
To import your certificate into the JVM, fetch the certificate *.cer file from your company's IT department and
store it on your machine, by performing the steps.
Microsoft Windows®
1. In the command shell, enter the following command:
cd C:\Program Files\Java\jre<VERSION>
\lib\security
Example:
C:\Program Files\Java\jre7\lib
\security
2. Next, enter the following command:
keytool -import -file <PATH OF THE .cer FILE>
-keystore cacerts -alias <ANY ALIAS>
Mac OS®
1. In the Terminal window, enter the following command:
cd /Library/Java/JavaVirtualMachines/
jdk<VERSION>.jdk/Contents/Home/jre/lib/
security
Example:
/Library/Java/JavaVirtualMachines/
jdk1.7.0_65.jdk/Contents/Home/jre/lib/
security
2. Next, enter the following command:
sudo keytool -import -file <PATH OF
THE .cer FILE> -keystore cacerts -alias <ANY
ALIAS>
When I tried to clone a repository in github, I was able to do. However when I tried to push a change I got again proxy error. I hope you will not get these proxy errors in your network.
IDE Usage:
IDE usage is nearly the same with the one in the cloud at first glance. However there are some significant differences. For instance plugin configuration is not up to date as in cloud. As I mentioned earlier destinations can not be configured via user interface. This is an important drawback. However it's easy to configure. However keep in mind that it's still not in productive usage. I think these configurations can be done via ui in productive version.
Conclusion
SAP Web IDE is great tool with great features like WYSIWYG editor for XML views, code completion, plugin configuration. Having this features on local development environment is an opportunity. On the other hand cloud version is more step forward so, if you don't have any security or network restriction using the cloud version is still better option.
In my opinion the real benefit of web based tool can be exploited when it's used on cloud. Accessing your code anywhere on any device (yet, writing your code on tablet is not practical) is great opportunity. Local Web IDE doesn't doesn't have any difference comparing to Eclipse when we look at this perspective. However lots of feature where available in Web IDE makes ahead.
Let's wait and see what will happen in productive version.