On-Premises vs. Cloud Computing: Which Is Best?

The shift to cloud computing has been dramatic in recent years and will only continue to gain traction. Gartner predicts the cloud computing market to reach $1 trillion by 2027. It’s a flexible, scalable, and cost-efficient solution to the growing demands of modern enterprises, but this doesn’t mean that on-premises infrastructure is obsolete. For certain organizations, on-prem solutions may still be the most suitable option.

When is cloud the right answer, and when is on-premises? Keep reading to explore the key differences between on-premises vs. cloud computing, the advantages and disadvantages of each, and a potential solution that may benefit any business that cannot commit to a single solution.

What Does “On-Prem” Mean?

When people use the term “on-premises,” they’re referring to IT infrastructure and resources that are physically located and managed on-site at a company’s own facilities. This means that all hardware, servers, and storage systems are maintained and operated by the company itself.

What Does Cloud Computing Mean?

When companies use cloud services, they outsource the management and operation of their IT and cloud infrastructure to third-party providers like Amazon Web Services (AWS), Microsoft Azure, or a combination of different cloud providers.

Instead of owning and maintaining all the servers, databases, software, and other computing resources themselves, companies that operate their infrastructure through the cloud pay for these services on a subscription or pay-as-you-go basis.

On-Premises Infrastructure vs. Cloud Computing

The main distinction difference between on-prem vs. cloud computing is the ownership of computing resources—whether they’re owned and operated by the company or outsourced to a third-party provider.

However, choosing a model isn’t just about a company’s preference between owning and outsourcing. Both options have their own advantages and downsides, and certain laws and regulations may impact an organization’s decision to choose one over the other.

So, what might businesses consider when deciding between an on-prem vs. cloud computing? Let’s go over a few of those here.

Scalability

Without a doubt, cloud computing is more scalable and flexible than owning and managing computing resources on-premises.

When you operate your infrastructure on the cloud, you can quickly scale up during peak demand—or scale down when not as much IT resources and computing power are needed—by simply purchasing that extra capacity from your cloud provider.

When companies operate their own data centers on-prem, they usually need significant time and financial investment to procure and set up additional hardware to handle spikes in demand for computing resources. With on-prem, fluctuating demand can also lead to cost inefficiencies, since those resources may not always be in use.

Security

Operating your own on-premises IT resources is seen as the more secure option for businesses that handle sensitive data, as long as they have effective security practices in place. For some industries, this approach is even a requirement.

Sectors like government and banking often cannot store sensitive information with third-party cloud providers due to strict data security regulations. Managing their own infrastructure allows businesses in highly regulated industries to maintain tight control over their data and stay compliant.

Maintenance

On-premises infrastructure requires skilled IT staff to maintain and upgrade those resources to keep them in optimal condition. Larger companies with well-established IT departments may find this manageable, but smaller organizations with limited personnel may struggle to sustain this level of support.

Pros and Cons: On-Prem vs. Cloud

There are a lot of pros and cons to weigh when choosing between on-premises and cloud computing. The approach that a business adopts depends on their industry, size, business needs, and more.

There may not be a clear-cut answer, given how many trade-offs a company has to make when choosing one model over the other.

Pros of On-Prem Infrastructure

Greater control over data and infrastructure
Enhanced security with in-house management
No reliance on internet connectivity for access
Easier to meet specific compliance requirements

Cons of On-Prem Infrastructure

Limited scalability and flexibility
Higher IT staff responsibilities and resource demands
Potentially higher upfront costs for hardware and maintenance
More complex disaster recovery planning and implementation

Pros of Cloud Computing

Highly scalable and adaptable
Alleviates IT staff responsibilities
Potentially cost-effective
Built-in disaster recovery options

Cons of Cloud Computing

Costs can escalate if not managed properly.
Access relies on a stable internet connection.
Data security is generally lower with third-party providers compared to managing it in-house with robust security practices.
It can be harder to meet compliance requirements in certain industries.

Is a Hybrid Approach the Answer?

The good news is that you may not have to choose, because a hybrid approach exists. A hybrid approach is a strategy that combines both on-prem resources and cloud computing services.

For example, a business can store sensitive data and run critical applications on-premises while leveraging the cloud for less critical workloads or to handle fluctuating demands. Or, if a business has legacy applications running on-prem that would be too disruptive to migrate to the cloud, they can keep those systems in place while still taking advantage of cloud scalability for other tasks.

Whatever the specific reason, data shows that more and more businesses are recognizing this method as the preferred way to deploy their IT resources because it’s cost-effective, agile, and more resilient than relying on a single approach.

On-Prem vs. Cloud vs. Hybrid: How Will You Deploy Your IT Resources?

Ultimately, the decision between on-premises, cloud computing, or adopting a hybrid approach will depend on factors unique to your organization.

Are you managing legacy systems that would be difficult to move?
Is your business subject to industry regulations that require you to store sensitive data on-premises?
Do you see seasonal demand fluctuations that require on-demand resource scaling, or are you focused on maintaining predictable, steady workloads?
Do you need to optimize costs as much as possible, and are you prepared to invest in the necessary IT personnel to maintain on-prem infrastructure?

All of these questions and more will shape your IT deployment strategy.

Need a partner? Evergreen is a professional services provider that offers cloud services and solutions, no matter where you are in your cloud journey.

We can help guide your overall cloud strategy, shape your cloud or hybrid cloud deployment strategy, architect, build, and migrate workloads to the clouds for you, manage your cloud operations, and optimize costs.

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