Today’s business environment has necessitated moving tech infrastructure online. This includes moving software systems from on-site premises to Cloud-based systems. That said, several traditional or legacy companies are yet to make this transition, for many reasons.

If a business has to keep up with the times and future-proof its operations, this move is now inevitable. If you have been considering moving to the cloud but are unsure of how to do it and what it means for your business, this article will spell things out clearly for you,  including a clear understanding of what the transition from on-premise to the cloud involves and the pros and cons of cloud vs on-premise. 

The most common question faced by IT departments of enterprises is – what works better for us? A cloud-based server or one located on-premise. 

The first thing to understand about IT infrastructure is that it is not a one-size-fits-all proposition. The IT needs of a business has to be prioritized as a first step to choosing a server location. This will form the foundation on which your organization’s IT structure is built up. Servers are an integral part of any IT infrastructure, but before we get into exploring cloud vs on-premise options, here is an understanding of what a server is. 

Servers are computers or devices that facilitate the transformation of data. When requests are placed on a computer, it provides the information that is requested. With this understanding of a server, let’s now look at cloud and on-premise servers. 

On-premise servers are how companies have traditionally bought and used their software. The servers for the software are part of the infrastructure that a company’s IT department invests in and maintains. This includes the physical space for the servers, the electricity to run it, regular maintenance, back-ups, and upgrades needed for the software. All of this is managed in-house. Software is purchased with full payment for licenses and is installed by the IT management department. Access to these servers is available remotely and online to all users. 

Cloud-based servers are a modern construct and are increasingly popular among businesses for their ease of use. Businesses pay a subscription fee for use of servers and software, access to both of which is provided online. The server and the software are owned and managed by the cloud services provider. With cloud servers, the infrastructure, security of data, data quality, all necessary back-ups and updates/upgrades are handled by the cloud service provider. 

Key Differences Between On-Premises and Cloud

Cloud vs on-premise servers is a comparison of traditional vs modern systems of functioning for the IT infrastructure of any organization. Both options are viable, though there is a clear shift towards the cloud in recent times. The option you choose for your company depends entirely on the kind of IT solutions you are looking for. To better understand how both these server systems can work for your business, here is a look at the key differences between on-premise and cloud servers based on various parameters.

Deployment

On-Premises: All required resources for the deployment of software, its maintenance, and upgrades are carried on in-house and on the company’s IT infrastructure. The company is responsible for anything related to the server, the software it handles, and all processes connected to it. 

Cloud: Here, all resources related to the deployment of software belong to the cloud service provider. The company pays for access to all those resources based on their usage. This can be upgraded or downgraded based on specific requirements. The cloud comes in three primary forms – the public cloud, the private cloud, and a hybrid format of the service.

Costs

On-Premises: All costs related to the deployment of software on on-premise servers will be that of the organization. This includes infrastructure such as space for servers, power usage, and provision for power and data back-up and maintenance experts. 

Cloud: An organization that uses cloud servers pays only for the resources that they use. They do not have to pay anything additional for maintenance or management of the server. The price they pay is dynamic and changes based on the consumption of services. 

Control

On-Premises: All data related to the organization is completely in control of the company, irrespective of circumstances. This is especially useful in those sectors where data security is of the utmost importance. This is often the primary reason for hesitancy in moving to the cloud. 

Cloud: There has been a constant struggle about the ownership of data where cloud servers are used. Since all data encryption and safety protocols are with the service provider, the security of data is always under threat from the unknown. If there happens to be downtime, even for the shortest period, it could mean a company has no access to its data for what could be a crucial period in functioning. 

Security

On-Premises: The one guarantee that on-premise servers offer is that of security of sensitive information. While security concerns are adequately addressed in cloud systems, the need to be doubly sure is crucial to some sectors such as governmental agencies or banking. In such cases, the security that on-premise servers offer far outweigh the cons that are associated with the setup. 

Cloud: The vulnerability of the cloud to cyber-attacks is the main obstacle to the complete transition of organizations to cloud servers. There have been several IT breaches that are well known and cybercriminals are constantly finding sophisticated ways to breach security networks. Security threats can come from several sectors, keeping the concerns around security with cloud networks on the higher side. 

Compliance

On-Premises: Working with on-premise servers is the simplest way organizations work on compliance. Every country has a set of regulatory requirements as far as data goes. This is especially seen in the insurance, education, and medical sectors. The security of data is of utmost importance and is easier to control and manage with on-premise servers. It is easier to ensure compliance of on-premise servers than it is in the cloud. 

Cloud: When companies choose to go with cloud computing, they will need to examine in-depth the security measures the third-party service provider undertakes and ensure that they are compliant with regulations applicable. With internationally-based cloud servers, this can be tricky. 

Advantages of Cloud-Based Servers

Based on the kind of business operations you have, cloud-based servers have their advantages. Here are the main benefits you should be aware of:

Affordability: The largest expense with any software is that of licensing. When you opt for cloud-based servers, you will pay a monthly fee that works out to much lower than paying a massive one-time payment. These monthly expenses are levied in the form of subscription fees. This makes it affordable for organizations looking to make the transition to the cloud. Since the subscription also includes maintenance and troubleshooting support, you save on hiring experts full-time to do the job. 

Easy deployment: The biggest benefit of cloud servers is their almost plug-and-play nature. They can be deployed quickly and don’t involve long drawn-out installation protocols. Once subscriptions are purchased, a company can begin using the applications immediately. Such quick deployment ensures companies stay ahead of the competition. This is important in today’s competitive environments. 

Expert Management: Another major advantage to cloud-based servers is that the management of the servers and the software are part of the deal. There is no need to ensure software hosts, hardware or have experts on board for deployment. All of these aspects are handled by the vendor. This reduces pressure on staff in-house and brings the cost of IT infrastructure down significantly. All upgrades, security monitoring, and maintenance are handled by the vendor. 

Advantages of On-Premise Servers

On-premises software is a great value proposition based on the kind of business you have. Here is a look at the advantages this option brings to the table: 

Enhanced customization: Using on-premise servers gives you the ability to customize the software to your precise needs. This is especially useful to organizations that have niche requirements. Most cloud-based servers offer you only a certain level of customization and may not cover unique requirements. 

Licensing vs subscription: As a company purchasing licenses for on-premise software use, you have better control to distribute and re-allocate licenses based on your needs. Generally, companies invest in around 15 per cent more licenses than they require and this ensures an organization is ready for any expansion plans. It also facilitates any additional requirements in the lifecycle of a project. 

Improved security: A better control over security is the top-most reason to opt for on-premise servers. Just as with the storage of data, there are fewer chances of programs and data being hacked into and stolen when everything is maintained and managed in-house. Any enhancements to security measures are easier to implement too. Especially for organizations with niche requirements, particularly with compliance, it’s easier to implement enhanced security measures with on-premise servers. 

Which Option Works Best for Your Business?

With the benefits of both on-premise and cloud explained, the question arises, which one works best for your business. This is a question that most businesses struggle with and as a result, tend to put off making the move. Here is a breakdown of cloud vs on-premise solutions and the potential benefits one may have over another that could benefit a business specifically. It’s important to note that each option has its strengths and which one works best for a business is based on prioritized aspects of functioning. 

Where the Cloud Has an Upper Hand

The cost of ownership: The single biggest benefit that companies have when they opt for the cloud is that they save significantly on the total cost of ownership. When partnering with a service provider, companies do not need to invest in hardware, data centers, maintenance, upgrades, and expert knowledge. They can use the resources of the vendor at much lower costs. It helps businesses move their IT needs from being a capital expense to being an operational expense, resulting in huge savings. 

Flexibility: Public cloud platforms offer flexibility that cannot be had with on-premise servers. Companies can choose from several customized packages and even opt for pay-as-you-use packages. This helps organizations upscale or downsize based on the kind of work they take on. Paying for resources that you use works out to be significantly cheaper than maintaining a complex system but under-utilizing it. 

Scalability: Every time you need to scale up a business, cloud service vendors simply help you upgrade and the implementation is immediate. The virtualized infrastructure gives you instant access to more storage, security options, and functional upgrades based on your requirements. Any part of service no longer needed can be immediately deactivated. Such flexibility makes business operations simpler. 

Maintenance: Companies opting for public cloud infrastructure benefit from it being completely managed via third-party SaaS, IaaS, or PaaS providers. Based on the model you choose, your in-house IT team will be relieved of the pressures of ordering, buying, and implementing the latest upgrades and patches that your server will need. It brings down the hardware footprint for your organization and enables smaller and medium-sized companies to function with a smaller on-site technical workforce, whose focus is more on critical business requirements than daily maintenance operations. 

Data backups and disaster recovery: Quality cloud server vendor providers offer large-scale data backup and disaster recovery protocols. Often with such service providers, data is distributed and reproduced across their many data centers. If one machine or data center is affected for any reason – natural calamities, malfunctions, or anything else – companies will not lose their data and will continue to have access from another virtual server. Making such provisions with on-premise servers can be a complicated affair. 

Where On-Premise Emerges Victor

Cloud servers provide great flexibility and have several benefits. However, on-premise servers continue to be the choice of several organizations. Here is where on-premise options emerge strong. 

Better visibility and control: Several organizations prefer not to hand over their data and IT infrastructure to a third-party service provider, no matter how reliable they may be. Having an on-premise setup ensures companies have complete control over their data and any infrastructural deployment they may want to introduce. Companies will also be able to access their hardware if needed. With cloud servers, all services are provided virtually. If there is a malfunction, organizations will not be able to access hardware and have to depend completely on the vendor for solutions. 

Better control over data security: All cloud service providers have high-end and strict security systems in place to ensure that data is protected. However, data storage is done on the vendor’s systems. Unless an organization signs a zero-knowledge encryption agreement with the vendor, there are chances of the data being accessed by non-authorized personnel, leaving the data vulnerable to attack. A single cyber-security breach is enough to render the entire data stored vulnerable. IaaS providers offer security options for data that is in transit and being stored at various points, however, the nitty-gritty of such offerings vary based on the kind of virtual servers a company signs up with and how much they are willing to pay. 

Better Compliance: Being compliant with dynamic laws about data, security, and more in each country can be difficult. While virtual server providers do their utmost to ensure compliance, it is not simple, especially when there are multiple tenants that they cater to. This can have a significant impact on your data and its storage. It is the reason that several organizations, especially those related to education, banking, and insurance find it simpler to have an on-premise infrastructure where they can ensure compliance and immediately implement changes where necessary. 

Enhanced Performance: With a strong on-premise infrastructure, maintenance also becomes easier to handle. Back-ups in the cases of power failures can be locally managed. Considering servers are locally based, access by employees becomes easier compared to the use of remote servers with shared bandwidth. To access the cloud one will need high-speed Internet and bandwidth. This is reduced significantly when the servers are locally based on-premise. Especially when files are heavier, for example, raw data dumps of retail stores or graphics for movies, locally based servers will ensure quicker accessibility and enhance employee performance as well. 

Customization and vendor Lock-in: With on-premise infrastructure, customization of solutions to unique needs is highly achievable. This is often not the case with cloud-based servers that also cater to multiple other clients and who will need to keep their services more broad-based. Vendor lock-ins are another thing that can be avoided with on-premise infrastructure, ensuring that a company does not feel stuck with vendors even if they are unsatisfied. Making the move to another service provider is a tedious task and preferably avoidable, but it also means being stuck with a service provider offering substandard service once a lock-in has been signed. This problem is reduced significantly with on-premise set-ups. 

The Bottom Line The main differences when you evaluate cloud vs on-premise solutions are centred around the capital and operational costs. It also includes security of data, control over data and management, and scalability. The simplest way to answer the question of which works better for an organization is to understand what resources the company needs, what level of flexibility is required, how much access to the IT infrastructure is preferred and the scale of upgrades the company may be looking for in the short and long term. While the cloud can offer everything a company needs at lower costs than on-premise, control and ideal utilization of resources is what will dictate the final decision. 

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