On-premise versus cloud refers to the location where you host your company’s important digital resources, like data, applications, and software. It asks the question, “their place, our place, or your place?”
But, it’s not just about the location. There are several differences between these hosting infrastructures, and it has nothing to do with decor.
Gartner reports that 85% of enterprises are planning to adopt a cloud-first approach by 2025. So, now is a better time than ever to take a side in the ongoing on-premise vs cloud debate.
Stay with us as we take you through the differences, benefits, cyber security, and fundamentals of on-premises and cloud hosting. We weigh up the pros, cons, and costs to help you choose the right solution for your business.
What is the difference between on-premises and cloud hosting?
Just like real estate, the main difference between on-premise and cloud is location, location, location. We’ll give you the defining points of each below.
On-premises
An on-premises system is a fancy way of saying that a company hosts everything in-house.
If a company uses an on-premise hosting solution, it means they run applications, manage data, and deploy software on the premises. All of this is actioned across the company’s servers and kept private behind its own firewall.
The company’s internal team access and manage the data, meaning it cannot be reached by third parties.
Cloud infrastructure
In this case, cloud service providers take the data management responsibility away from the company. Instead, a third party does it all for you. So, the provider hosts and manages your company’s applications off-site.
When speaking about cloud services, you need to know the difference between private, public, and hybrid cloud models.
Private cloud
A private cloud is fully controlled by one organisation. It gives solitary access and is not shared with any other parties. In short, the cloud environment is solely dedicated to your company.
Companies create a private cloud that is managed by a cloud provider. These are usually favoured by company leaders who want to have their information accessible and on demand, but don’t want to put it into the public domain. This could be for compliance, security, financial, or regulatory reasons.
Public Cloud
Public cloud services are offered by providers over the internet. Anyone can access them over the public internet. And there are several free and paid-for options.
These save companies money because there’s no need to purchase or maintain hardware or the environment on their premises.
Hyperscalers in this space include Microsoft Azure, Amazon Web Services (AWS) and Google Cloud Platform (GCP). These providers are easily accessible and offer large-scale network infrastructure services.
Hybrid cloud
Like hybrid working models, hybrid cloud solutions offer a mix of remote and on-premise characteristics. You can expect a mixed services and storage environment that uses private cloud, public cloud, and on-premise infrastructure.
Hybrid clouds offer great support for large remote workforces, as well as improved security and risk management where it matters most.
What are the pros and cons of on-premise and cloud hosting?
In the case of cloud computing services, the right provider can offer enhanced agility and scalability. But, on-premise also has its perks. Total ownership is a huge benefit for businesses.
We summarise the benefits of both a cloud environment and on-premise infrastructure below.
On-premises hosting benefits
On-premise hosting has been around the longest. And, even though cloud computing has many attractive features, some feel that there is still a place for on-premises software. Here’s why:
Operate without internet access
Some worry that if the internet goes down, there would be major disruptions to productivity and operations. On-premises servers provide businesses with internal networks that do not need internet access to work, meaning employees can access essential data whether online or offline.
Control
Your company has full control of your computing resources. You decide which changes and updates are made, and when they happen. Although, it’s worthwhile noting that private and public cloud hosting offer similar levels of control.
For some, this solution provides more peace of mind because on-premises storage can only be accessed by your authorised personnel.
Cloud hosting benefits
Some companies may struggle with the idea of moving their data and hosting off-site. But, there are many advantages to a cloud computing environment, which make it difficult to ignore.
Affordability and cash flow
When it comes to premise vs cloud, on-premise does call for a large cost upfront because of the initial setup.
With cloud computing services, you don’t have to pay a large fee right away. Instead, you make regular payments, as you do with other business expenses. This is ideal for cash flow purposes.
These payments cover support, licensing, maintenance, and other related features.
Easy “installation”
A cloud environment can be deployed quickly via the internet and doesn’t need an on-premise installation. So, no interruptions to your company’s day-to-day.
ESG friendly
Sustainability is the word of the era. And cloud computing is doing its part to support companies in achieving their ESG goals.
Future-proofing
A complete re-design of an in-house on-premise environment is costly. Without a long-term plan, most companies will neglect data security measures and fall behind with IT personnel training. Cloud services offer a key advantage here.
You won’t have to worry about obsolete technologies or regular IT team training. Your software and applications remain current, relevant, and up-to-date.
Maintenance
Cloud hosting services lift the responsibility of maintenance from your team. Your company saves time and money because your provider takes care of all the updates and upkeep.
Remote access
You don’t need to be on the premises to access applications. With cloud solutions, you can access company information by mobile or web, at any time.
Scalability
Most companies highlight flexibility and agility in their core business strategies. The same applies to hosting.
Companies can scale cloud technologies up or down as they’re needed.
On-premise vs cloud: which is best for your business?
As you’ve read, both solutions have great benefits. But, where the tricky part comes in, is deciding whether on-premise or cloud is better for your business.
To make it easier, we take you through the key things you need to consider before deciding on a cloud solution or on-premise infrastructure.
1) Responsibility
Responsibility is one of the biggest reasons why companies hesitate to move to cloud solutions. The second reason is privacy.
With a cloud computing model, your company shares ownership with an external provider. This means sensitive data isn’t completely private.
Another downside is interruptions to connectivity. Third-party providers may schedule maintenance periods that conflict with your premises’ working hours.
2) Deployment
If you decide to go in-house, expect an interruption to your day-to-day. You will need to create an on-premise infrastructure, which will take time, money, and resources.
You’ll also have to factor in regular maintenance and upgrades as well as an IT infrastructure and a support team to implement these.
Cloud solutions have an edge here because the deployment isn’t dependent on the company’s infrastructure. It doesn’t affect company operations and setup is quick, taking only a few days, or even hours.
The service provider hosts the cloud system on its own servers while granting full access to your business and teams, any time and from anywhere.
3) Compliance
Depending on the country, companies have different regulatory and security concerns to take into account. Under GDPR, the regulations state that a data protection officer has to protect the personal information processed by the company. A Chief Information Officer may also be appointed to manage data compliance.
Where the lines can get blurred is in the case of data residency. For an on-premise solution, the data resides where the company “lives”. Or, off-site if they’ve opted for colocation. In the case of the cloud, it’s more difficult to pinpoint an exact location.
Cloud computing is flexible and physically unlimited. These cloud environments can store data in multiple locations to ensure continued availability. But, it’s a myth that cloud providers can store data anywhere.
Thanks to big players like AWS, Microsoft Azure, and VMware, cloud computing has grown exponentially. Cloud services are now widespread and large enough to give customers control over their data’s residence, without tripping over compliance red tape.
4) On-premise vs cloud cost comparison
We mentioned costs and affordability before. It is a huge deciding factor when it comes to choosing between on-premise vs cloud.
Which one would be better for you depends on if you’d prefer to take the hit upfront with ongoing maintenance and staff training costs afterward. Which is the case with on-premises.
Or, you can spread out the costs over time as a subscription. Leave the maintenance and updates up to a third-party provider. Cloud services are also more affordable for smaller businesses, or businesses that want adaptability. The initial deployment is faster and less expensive.
On-premise may appear to work out cheaper over the entire system life cycle, but it means your company takes entire ownership of the system, maintenance, related training, and future-proofing. All of this means that on-premises costs can run exponentially higher than cloud solutions.
Not only that, but there are also covert costs to consider like energy bills and the salaries of your employees who are responsible for it. You’ll also need to consider the spend and resources for developing an in-house security operations team.
5) Remote working trends
There are conflicting reports as to whether 2023 (and beyond) will lead to an increase in remote working. Or, if it will result in a ‘great return’ to traditional office working models.
McKinsey’s American Opportunity Survey reported that 58% of the 25 000 participants it measured worked from home for at least one day a week in 2022.
From February 2022 to May 2022, hybrid working spiked from 13% to 24%. Many employees have expressed that flexibility is highly attractive in job roles, which suggests the trend is here to stay, at least for the meantime.
This can prove to be a bit of a challenge for on-premise ERP systems. Because these usually need a mobile device and third-party involvement to access, it creates a nightmare of communication failures and security risks. It can also waste valuable employee time if it takes longer to access the company’s systems.
Cloud computing’s mobility has been a key driver for its growth against the backdrop of remote working. All your workers need is a device and an internet connection, meaning they can work from anywhere, at any time.
Cloud computing environment or on-premise – which should you choose?
The answer depends on your company’s needs and workforce. There isn’t a right or wrong answer – just one that’s better suited to you.
Luckily, there are several packages and options available to you. So, whether you choose their place (Public cloud), yours (on-premise), ours (iomart Cloud), or a customised hybrid solution, you can still get the best in cloud services for your business.