Distributing an application written in Ruby on Rails

Question

We have an existing web application that is written in Ruby 1.9.2 and Rails 3.x. Our original model was software as a service but in investigating in our industry there are times where hosting our code on the client may be a better option for privacy reasons (having the clients data stored at their own data center).

What are the best measures to protect our codebase from being viewed? Has anyone had experience compiling into JRuby or similar solutions. What are the steps are caveats?

Thanks