A Beginner's Guide to On Premise vs. Cloud Solutions

What is On Premise Hosting?

On premise software is the traditional strategy for hosting technology solutions. In an on-premise environment, software and infrastructure reside in-house. This means that businesses are responsible for managing and maintaining their own hardware, software, and data storage onsite. In addition to the upfront investment required to deploy on premise software, cost to maintain physical space and skilled IT staff are ongoing requirements for on premise solutions. 

What is Cloud Computing?

Cloud based software is a platform for acquiring computing services over the internet. Such services include, but are not limited to software, storage, monitoring, security, and analytics. In a cloud computing environment, hardware and software applications as well as data storage are hosted remotely through a third party provider. Thus, businesses rely on these providers to manage and maintain their computing capabilities.

On Premise Hosting VS Cloud Computing

With this basic understanding of the advantages and disadvantages of on premise hosting and cloud computing, let’s take a deeper look at key differences between the two based on five critical factors. These factors include deployment, cost, control, security, and compliance.

1. Deployment

On Premise: In order to deploy on premise technology solutions, businesses must first acquire hardware in the form of servers as well as the space to house them. Then, a license or copy of the desired software applications must be purchased and installed on the company’s servers behind its firewall. This requires companies to hire and train skilled IT staff who will be responsible for maintaining, protecting, and integrating applications and data on the local server. Depending on the size and complexity of the company's technology needs, this process can be quite extensive and require significant time and resources.

Cloud: In contrast, the deployment of cloud computing does not require an initial capital expenditure. Instead, a fee is paid to use software and access data over the internet. Thus, the time and resources required to implement a cloud solution are significantly less than for on premise solutions. 

In summary, deployment of cloud computing takes less time and resources than deployment for on premise computing. 

2. Cost 

On Premise: Companies that deploy on premise hosting have many costs associated with it. Since hardware and software installation are necessary for on premise hosting, it requires a higher initial investment in order to purchase servers as well as license and install software. In addition, companies are responsible for ongoing costs such as server hardware, power consumption, space, maintenance, and additional infrastructure and processes if needed.

Cloud: Unlike on premise hosting, cloud computing has no upfront capital costs. Since the infrastructure belongs to a third party, companies do not incur ongoing costs to maintain and house infrastructure. In addition, cloud computing allows companies to pay only for the resources that they use, this is also known as the pay-as-you-go service fee. Thus, depending on consumption, prices are adjusted up or down and costs of unnecessary capacity are avoided.

Ultimately, when it comes to pricing, cloud computing is more cost efficient. Not only does it provide a pay-as-you-go model but it requires no upfront capital investments and reduces ongoing maintenance costs. 

3. Control and Accessibility 

On Premise: Since companies house their own servers in an on premise environment, they have complete control over access to their systems and data. This requires that companies employ an access control strategy including restrictive software and IT support. In addition, in the event of service outages, provisions for local backup power must be considered.

Cloud: Unlike on premise hosting, control and accessibility of software and data is outsourced to a third party provider. Furthermore, since data is stored on a third party server, a company’s data and encryption keys are shared with the provider resulting in less control. In addition, because internet connectivity is required to access software and data, service interruptions can lead to costly downtime. On the other hand, since company systems can be accessed remotely, workplace flexibility is greatly improved.

Overall, on premise hosting offers more control than cloud computing. However, this control comes at a higher cost and reduced workplace flexibility.

4. Security

On Premise: Security is a major selling point for on premise hosting. Since software and data are stored in-house, companies are responsible for maintaining the security of the systems themselves. This minimizes much of the concern over data security being in the hands of a third party. 

For example, companies are able to decide which policies to adopt and the type of security to implement. Thus, with on premise hosting the company is solely responsible for implementing a sound security strategy and staffing employees capable of handling data security protocols.

Cloud: The number one concern with cloud computing is security. Since cloud-based solutions handle sensitive data, providers must adhere to strict data security standards. For example, providers should use security measures like biometric access control, screenings, and strict visiting policies in order to defend against physical attacks. Although data in the cloud is encrypted with a key that only the provider and company have, numerous publicized breaches have highlighted risks.

Security is one of the most important factors when differentiating between on premise and cloud computing. Some security experts prefer on premise over cloud based security due to the level of control over the privacy and security of the data. However, it is important to note that unexpected blackouts, malware attacks, and system failures are likely to happen with on premise as well as cloud systems. 

When it comes to overcoming these issues, cloud computing often has advantages compared to on premise models. This is because cloud computing software has the ability to update and install security patches across multiple touch points more quickly than on premise hosting. 

5. Compliance

On Premise: Many companies operate in industries that are subject to regulatory controls. For example, the healthcare industry is subject to the Health Insurance Portability and Accountability Act (HIPAA) for private health information and the education sector must follow the Family Educational Rights and Privacy Act (FERPA) for the privacy of student education records. Typically, the on premise model is best suited for companies that have to meet these government and industry requirements since data is stored on a local server.

Cloud: In a cloud computing environment, companies must ensure that their third party provider is compliant with the regulatory mandates within their specific industry. In addition, since their data is stored with a third party provider, companies must get comfortable with the provider’s measures to ensure sensitive information pertaining to employees and customers are kept secure and private. 

The industry your business resides in may require an on premise model. For example, any data protected by law should never be stored on the cloud. Furthermore, government data will always be stored using on premise hosting for security and privacy purposes. 

How to Choose Which Solution Is Best for Your Business?

There are ample advantages and disadvantages to both on premise hosting and cloud computing. For example, advantages of on premise hosting include complete control over server hardware and a high level of control over privacy and security. While disadvantages of on premise include a high initial investment cost, enhanced IT support, and ongoing maintenance requirements. On the other hand, advantages of cloud computing include quicker development, lower level of required IT support, and scalability. While disadvantages include the requirement of internet connectivity to access the company's computer systems and outsourced security.

The choice between on premise and cloud computing is a matter of which model best fits your company’s priorities. Companies who operate in highly regulated industries that deal with sensitive data, may benefit from the infrastructure, maintenance, and staffing required by an on premise model. On the other hand, companies who are attracted to the lower investment cost, shorter deployment time, and reduced maintenance and staffing costs of cloud computing will likely benefit from adopting a cloud model. In addition, companies who choose to implement a cloud computing model will benefit from improved scalability and flexibility.

Determining which model is best for you depends on the answer to these three questions:

  1. Can you afford the initial investment required to deploy an on premise solution?
  2. Are you equipped to ensure top level security?
  3. Do you need to be able to scale quickly? 

Today, many companies are making the switch to cloud computing. In fact, according to Statista, global spending on cloud services was 270 billion U.S. dollars in 2020 and is expected to grow to an estimated 397 billion U.S. dollars in 2022. Nevertheless, it is important for companies to understand the advantages and disadvantages of each model before making a decision. 

Final Thoughts:

Remember there is no right or wrong choice between on premise and cloud computing. In other words, they each have advantages and disadvantages. That being said, the right choice for your company is the one that best aligns with your priorities. Keep in mind that:

  • On premise hosting provides more control and privacy over data
  • On premise hosting can be better for adherence to industry compliance
  • Cloud computing is easier to deploy
  • Cloud computing is less expensive
  • Cloud computing reduces IT support requirements

Did you know that Y Meadows supports both on premise and cloud implementations?


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