Friday, July 19, 2024

On-premises vs cloud: The advantages and Disadvantages

Privately owned and controlled, or outsourcing to the cloud?

This is a question that every business considers at some stage and is a pivotal decision for managing your digital infrastructure. What sounds like tech jargon has become essential as something that all employees should be aware of.

Cloud computing has become a top favorite for up to 89% of companies, which might raise the question of, “Is on-premises software ever worth it?” Let’s delve into the world of on-premises vs cloud services.

What’s the difference?

Think of on-premises solutions as the traditional, old-school methodology of managing your data and applications. On-premises computing implies your servers and equipment are within your office or company data center, which equates to greater control over the environment and systems.

In contrast, cloud infrastructure is outsourcing everything we mentioned to a cloud service provider. All your data and applications are stored on remote servers, accessible online. In doing so, a company relies on someone else’s on-premises technology and this can somewhat lead to reduced control.

The advantages of on-premises software

Although it’s the older avenue of managing your data, it’s stuck around for good reason. Undoubtedly, there are several benefits to having your data, servers and applications physically located within your organization’s ecosystem.

Data control and security

Cybersecurity is of immense concern and what better way to ensure protocols are incorporated than by utilizing on-premises solutions. Having everything on site enables unparalleled control and security because your data is under your watchful eye.

You’re not entrusting confidential information to third-party services and this is often compulsory for certain industries with strict data regulations.

Customization and flexibility

Think of a garden.

You decide what plant goes where, how much water it gets and the amount of sun exposure. The same is applicable to on-premise software as it gives businesses the power of their infrastructure to suit unique needs.

Whether you’re in need of specialized software licenses, custom database structures, or specific hardware configuration, the on-premise world enables an IT ecosystem that aligns with your objectives.

It also gives your company a sense of autonomy. Upscaling and downscaling are in your hands, while agility remains high as you choose the technology needed.

Avoiding vendor lock-in

Cloud computing is great, but it involves being locked in with a vendor.

On-premise technology is the best solution for companies to avoid being bound to a particular cloud provider and their services.

While on-premises computing provides unparalleled customization and flexibility, it’s essential to remember that these advantages come with the responsibility of managing and maintaining your infrastructure. This approach requires careful planning and resource allocation to maximize these benefits.

And as with everything, there are disadvantages.

The disadvantages of on-premises software

While on-premises computing offers remarkable advantages in terms of customization and control, it’s not without its share of drawbacks.

Hefty initial investment

Don’t have a substantial amount of capital for upfront investment? Then on-premise technology might not be a possible option for your organization.

Opting for this model means you’re building and maintaining a personal digital infrastructure from scratch. It involves purchasing hardware, software licenses and possibly even hiring experts to set everything up.

In short, it can be very expensive.

Limited scalability

Your on-premises infrastructure is like a physical workspace that has its spatial limits.

Scaling your digital resources without additional investments in hardware and infrastructure will be a challenge if your business is scaling.

This can be particularly problematic if your business encounters rapid growth, as the process of expanding an on-premises setup is often time-consuming and costly.


Unlike cloud software, all of the maintenance is up to the business.

You’ll need to establish an in-house IT team or contract with external experts to handle tasks like software updates, security patches, hardware maintenance, and troubleshooting. This requires consistent capital expenditure and the allocation of time, which can quickly become a hassle.

The bottom line is scalability and costs quickly show why on-premise technology is not for every business.

The advantages of cloud

There’s a reason why the majority of businesses are switching over to the cloud. This digital paradigm contrasts the on-premise technology by storing data and applications on remote servers, these are known as cloud providers.

This setup is accessible over the internet, which is an added bonus for people who like to work from anywhere.

The cloud can effortlessly accommodate your growing or fluctuating needs, ensuring that you have the resources you need when you need them.

Cloud providers utilize shared resources, which leads to cost efficiencies and more robust resource allocation.

You can provision and manage resources independently, often through a user-friendly web portal. This grants you greater control and flexibility.

You typically pay for cloud resources on a pay-as-you-go or subscription basis, allowing for cost predictability and cost savings.

Cost-effectiveness and scalability

A study by IT experts found a 20% overall cost savings after leaving on-premises hardware. Outsourcing has always been the cost-effective option for almost anything, and the same holds true for cloud technology.

Cloud also proves to be advantageous because you only pay for what you need, which is ideal for startups and businesses with fluctuating resource demands.

Scalability in the cloud is a breeze.

Businesses experiencing rapid growth can access cloud technology without needing to wait for hardware to arrive and for people to set up the infrastructure. Conversely, companies that need to downsize can accomplish this easily by canceling their cloud subscription. You’re not locked into any hardware investments and there are no repercussions.


Work from an office, from home or while sipping a coffee at your favorite cafe.

The cloud computing environment can be accessed from anywhere so long as you have an internet connection. Now that many companies offer hybrid work conditions, the cloud has become a core part of their operations to ensure employees have no difficulties.

This also removes the burden of dealing with downtime because of infrastructure complications. Cloud providers like the Google Cloud Platform have many servers across the globe that are frequently backed up which means there’s no risk of losing business because of on-premises infrastructure issues.

Automatic updates and maintenance

Cloud providers handle the heavy lifting when it comes to updates and maintenance.

It eliminates the need for allocating resources internally to complete these tasks. Not only does this save time, but additional costs are also mitigated.

Businesses are passively bolstering their security by using cloud platforms because of their automatic updates. Applications and systems are constantly improving themselves and are equipped with the latest features for mitigating cybersecurity threats.

The disadvantage of cloud

Cloud also has its share of challenges that can make things tricky, but overall it’s the overwhelmingly preferred option.

A lengthy process

Your data can be in stasis for several months depending on the scale of your business. Cloud migration isn’t a quick process and attention to detail is paramount when undergoing the process.

Any mistakes can lead to data leaks or misconfiguration, which can lead to many headaches down the road which will be a severe productivity roadblock.


Vendor lock-in

Unlike the on-premise technology, once you select a cloud provider you are locked in.

This means you can’t bounce between different providers for specific software that might be required. That’s why most businesses choose renown providers because they are generally equipped with all of the latest cloud software you’ll need.


We just mentioned that cloud technology can save businesses a significant amount of capital.

But that doesn’t come without a robust plan of how the software will be utilized. A study by Gartner found that organizations are wasting an average of 30% of their cloud spend.

For every $10 spent on cloud computing, $3 is going to waste.

And this happens for various reasons including:

Businesses allocate more resources to their cloud workloads than they actually need.

This is on the opposite spectrum of overprovisioning, where businesses are spending more capital on technology that isn’t being made use of.

Cloud computing saves money, but selecting a bad cloud pricing model is a common occurrence. Businesses don’t optimize their cloud usage or aren’t taking advantage of discounts

Many businesses forge to unsubscribe from cloud resources they are no longer using. Maybe they purchased the technology for a single project and didn’t turn off the resource after completion.

Overall savings from the cloud are undoubtedly worth it, but can quickly become an issue if these details are overlooked.

The final verdict

There’s no one answer that fits all businesses, but there are general guidelines that work.

Entrepreneurs and small businesses should opt for cloud services because they usually lack the capital and space for on-premise technology. On-premise hardware holds a large risk for businesses that are new and in the most malleable phase of their lifecycle.

Whereas large businesses and enterprises will typically be in a comfortable position for selecting on-premise equipment. These companies have enough resources to make this option work and it no longer becomes as much of a risk.

Splitting your resources between on-premise and cloud computing is also a viable option. In the end, so long as businesses are analytical about their usage of all technology and consider risks, then any option is possible.

Read our guide on The disadvantage of cloud computing and What is a cloud-first strategy.


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Amy Menzies

Amy Menzies

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