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On-Premises vs Cloud: Is the Cloud Always Better?

It's not always crystal clear whether an on-premises solution or the cloud is better for your workloads. Here we take a deep dive into the options.

12 min read
On-Premises vs Cloud: Is the Cloud Always Better?

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Deciding where to host your company's computing infrastructure is a significant decision. Should you keep everything on-premises? What about cloud computing or a hybrid cloud solution? What are the advantages of cloud vs. on-premises systems?

This comprehensive guide will analyze all the considerations needed to choose the best option for your unique business needs. We will help you weigh the pros and cons of each solution, and then our expert team can help you implement the right tools.

Let's dive in!

The Difference Between On-Premises vs Cloud

We'll start with defining on-premises and cloud including their pros and cons.

What is On-Premises Infrastructure?

On-premises infrastructure, sometimes called a private cloud, refers to a computing environment managed at your company's physical location. Only you have access to the hardware systems and tools connected within this infrastructure, so you are solely responsible for setting it up and maintaining it.

That means you must purchase the appropriate hardware and software to keep your business running. If you need more compute power or additional storage space, it is up to your team to procure the servers and other components and implement the upgrades.

For example, this type of infrastructure can include an on-site server room where all your company's applications are hosted, and data is stored. Only internal team members (if proper security measures are implemented) can access the infrastructure and network, and you do not need to rely on third parties to manage it.

So, what are the pros and cons of an on-premises data centre?

Benefits of On-Premises Computing

One of the main reasons businesses choose to keep their computing on-site is to retain complete control over the infrastructure and data stored with it. Whether that's a good thing or a bad thing is up to you - but it may be the better option for some organizations with privacy concerns or extra data security needs.

For instance if you have a database with highly sensitive data, you might choose to keep that specific data workload on-site and access that data from other workloads in the cloud (a hybrid architecture). In this scenario, the enterprise retains ownership of all the data, software, hardware, and other technology needed to keep the business running.

Drawbacks of On-Premises Computing

As you may have guessed, being in complete control of the infrastructure can be a double-edged sword. Keeping all your servers and computing equipment on-site means that you need to have adequate space to keep the components stored and ventilated. It also requires you to purchase individual software licenses and hire an IT team to support the organization and address any issues that may come up. You're also responsible for security of the premises in which your on-premises data centre is housed. This is an area in which cloud providers excel.

If you ever need additional compute capabilities in the future, you must go out and buy additional servers or upgrade your existing equipment. Not only can this get expensive, but it also requires a lot more work for your in-house team, not to mention it's slow! When a marketing campaign is unexpectedly successful and traffic spikes, you can't exactly wait days for upgrades to meet demand hitting your servers right now.

Similarly, supporting an on-premises data centre increases your risk of data loss caused by hardware malfunctions or natural disasters.

Cloud Computing: What is it?

Now that you have an idea of what on-premises computing entails let's review the basics of cloud platforms.

Cloud computing, sometimes called public cloud, allows you to access technology like cloud storage, compute services, machine learning and artificial intelligence resources, Internet-of-Things (IoT) services, and much more. This on-demand solution lets you take advantage of these resources without having to buy and maintain them on your own.

That means you don't have to worry about managing a physical data centre filled with costly servers. You have access to top-tier databases and computing power whenever you need it!

Amazon Web Services, or AWS, is one of the most popular solutions for cloud since it gives you access to some of the best infrastructure available with the push of a button. The pricing is set up to pay as you go, which is perfect for a growing business that needs a platform that can scale without huge costs up-front. Alternatives to AWS include Microsoft Azure and Google Cloud Platform.

Different Types of Cloud Computing

Cloud computing is a broad term one can narrow down into three different types of services: Infrastructure as a Service, Platform as a Service, and Software as a Service.

Each option provides different levels of flexibility, management, and control. Understanding these differences will help you choose the right services for your business needs.

Infrastructure as a Service

Infrastructure as a Service, or IaaS, is the foundation of the cloud. Think of it as the complete toolkit of all the cloud platform's services with which you can build just about anything you can imagine. It offers the most flexibility and is the most complex, requiring the deepest knowledge and experience (this is the pond the certified AWS consultants at Pilotcore swim in). It's an on-demand system that provides you with networking features, data storage tools, compute resources and other essential building blocks for your cloud environment's needs.

It is very flexible, so you can easily manage your IT resources which are housed within the global data centre infrastructure managed by the service provider. That means physical servers, and their host operating systems are handled for you! All you have to do wire up all the services and resources you need.

Platform as a Service

Platform as a Service, or PaaS, is a subset of IaaS. With this solution, the underlying infrastructure is managed for you, enabling you to focus on deploying your particular application or data onto it with minimal configuration. In this scenario, infrastructure like servers, networking, and integrations with other services are managed by the platform provider. In AWS, this could be Elastic Beanstalk or Elastic Container Service's Fargate, which both remove the need for the end-user (you) to manage its inner workings. You spend less time building and maintaining infrastructure and more time deploying, testing, and serving your applications to your customers.

PaaS essentially eliminates the need for you to manage any hardware while still allowing you to control the applications hosted on them. This abstraction reduces the burden of capacity planning, maintenance, and software procurement.

Software as a Service

Software as a Service, or SaaS, is a subset of PaaS. In this scenario, you subscribe to a 3rd party end-user application that is hosted on the cloud. You don't manage or deploy anything because, in this scenario, you're the end-user.

A typical SaaS application is web-based email. The key here is that you don't have to worry about how the infrastructure or underlying technology is managed - all you need to do is use the software to help your business succeed.

If you're a startup or SMB that provides a software application to end-users, you might choose to deploy that directly with the IaaS model or decide to use a PaaS service to make life easier. Either way, the result for your customer will likely be your software product provided to them as SaaS.

Benefits of Cloud Computing

There are many advantages of cloud vs. on-premises computing. Perhaps the most obvious benefit is the speed at which you can get your infrastructure up and running and how fast you can go global. You can access all the technology you need right away, so you can innovate and grow as quickly as your business can.

Whether you need machine learning platforms, data storage, compute capacity, or other infrastructure, cloud services can give you the tools you need without forcing you to buy and maintain the components internally.

Having the ability to deploy this tech right away gives your organization agility and freedom to implement new ideas without delay! It also means you don't have to buy more capacity than you need upfront. Pay for what you use, and then you can scale out as your needs evolve.

Another benefit of the cloud is that it provides greater efficiency. Rather than hiring an entire IT staff to run your networks and databases, a third party like AWS can manage it for you. Not having servers also eliminates the need to spend time maintaining and upgrading them - so your team can instead focus on value-added tasks.

Likewise, it is more affordable to leverage the expertise of managed services to implement new technologies that your team has yet to master.

Drawbacks of Cloud Computing

Unfortunately, no infrastructure setup is perfect, and there are drawbacks to cloud as well.

One of the main barriers keeping businesses from adopting the cloud in its entirety is security concerns. There have been many instances of cloud breaches where bad actors accessed private information or intellectual property due to configuration errors on the part of the customer.

These security breaches pose a real threat. The good news is that the cloud has everything you need to be highly secure; you as the customer have to prioritize this from the ground up when building your infrastructure. If you're not sure how to do this, hiring an experienced AWS cloud partner like Pilotcore will help.

In addition to security, if you go with an IaaS approach, you are responsible for ensuring high availability of your applications and data. AWS has many services like S3 and Aurora that offer features in this area, but it's critical for you to understand how they work and ensure they are correctly configured. With cloud, multiple data centres spread around the globe, you have everything you need at your fingertips to secure redundancy, high availability and the ability to recover quickly from disasters. You have to build it.

Suppose you go with a PaaS option like Elastic Beanstalk or Fargate. In that case, your applications will scale across availability zones in a region without a great deal of manual configuration, which will be music to the ears of those less versed in the technical side of AWS.

Pilotcore is here to help you configure what you need in the AWS cloud, Azure and GCP.

Similarly, you must consider data residency requirements if applicable to your workloads and keep your data within the required regions.

The answers to these questions will vary based on the vendor you work with, but it is one of the reasons that some organizations are hesitant to do a complete cloud migration.

Hybrid Solutions

You may be wondering - do I have to choose between on-premises and cloud? I like the features of both, so can you set up the infrastructure in a way that provides the best of both worlds?

The answer is yes! There are hybrid cloud solutions that help you address the drawbacks of each type of setup while getting the benefits of both.

A hybrid solution may involve various deployment models, such as a mixture of on-premises and private cloud systems. It still depends on a platform managed by a third-party provider, but it incorporates a private cloud that is connected on-site.

AWS offers a hybrid cloud solution called AWS Outposts that allows you to deploy AWS services into servers hosted anywhere, even if the servers and other components are maintained at your physical location. This flexibility enables you to keep applications requiring low latency or local data processing on your premises. Plus, you can do so without having to sacrifice the benefits of cloud computing.

This hybrid cloud option is an attractive solution for any business that has data residency requirements. Certain governments may require you to keep health or financial data within their borders. Hybrid infrastructure ensures that you can meet these obligations while still taking advantage of cloud technology!

Cost Comparisons

As with any business decision, cost should always be a consideration. Let's review the cost difference between implementing an on-premise infrastructure vs. one in the cloud.

Cost of On-Premises Infrastructure

There is a significant capital investment required to establish your computing infrastructure on-site.

For example, you will need to purchase all the equipment to manage your networks and databases, including servers and other hardware. Building on-premises infrastructure requires extensive planning and partnering with vendors for sourcing and installation.

Not only do you have to pay for the equipment upfront, but there will also be additional expenses for your IT team to set it up. Likewise, you will be responsible for the cost of upgrading and maintaining the hardware.

In addition to the capital expenditures, on-premises infrastructure also has operating expenses to consider. These include everything from the cost of electricity to the costs associated with maintaining the IT facility, staff, training end-users, and more. You must also include the fees for software licenses needed for your employees.

As you can see, these costs can add up rather quickly - and you must always be prepared for unforeseen repair and maintenance expenses!

Cost of Cloud Infrastructure

Like we mentioned, cloud is the more cost-effective option. However, there are still cost associated with cloud migration, and you should be aware of what expenses you must cover.

Rather than paying for the servers and data centres upfront, cloud computing instead involves paying a third-party provider as you use the resources! This payment model means you are only paying variable expenses and avoiding the hefty capital investment needed for on-premises infrastructure.

Think of it this way - since you don't have to set up servers yourself, you can leverage economies of scale that providers like AWS offer. Similarly, you are not responsible for any of the upkeep or maintenance costs either.

You will need to pay for management and support since this is the key to ensuring that your cloud system runs smoothly. The good news is that the experts at Pilotcore can manage your systems remotely. The fee for this is much lower than what it would cost to hire a dedicated IT team!

There may also be costs associated with migrating your data to the cloud since you will likely need to run your systems in parallel to confirm that everything is working correctly. Determining these expenses will involve analyzing how much data you have on-site or in your legacy networks.

After the setup is complete and your data is transferred to the cloud, you must partner with experts to optimize your spending. The consultants at Pilotcore can help you lower your IT costs by optimizing your AWS services. They will make sure that you select the best options and only pay for what you need.

How Are Resources Deployed?

Next, you must consider how resources like servers and software are deployed when comparing on-premises to cloud data centres.

On-Premises Deployment

The way your applications are deployed to a server in an on-site data centre will vary depending on which operating systems and software you use. For example, you might use Jenkins to orchestrate CI/CD, but unless you're using containers, you'll have to maintain a separate physical production server, staging server, and development server. It will be up to your internal IT team to ensure that all the relevant processes are correctly established.

This deployment process can be time-consuming and expensive to run all the extra hardware needed for proper testing and deployment pipelines on-prem. Not only does on-premises deployment require a high initial investment, but it also involves higher business risk.

Cloud Deployment

If you're deploying to cloud servers, you can launch and destroy instances at will. This flexibility makes for fast and efficient CI/CD processes and very low cost. You can launch testing servers for every source commit and pay pennies to run tests. There's less risk of misconfiguration because you can use fresh instances for every run of the pipeline. In contrast, you must take extra maintenance steps with on-premises physical servers to make sure your environments are clean between deployments.

You can also use automated deployment in the cloud to provision your actual cloud infrastructure using powerful infrastructure-as-code (IaC) tools like CloudFormation and Terraform, then commit your infrastructure templates to source control for team collaboration. This efficiency is impossible when dealing with physical hardware.

Security Considerations

Whether your databases store proprietary data or customer information, you must have processes in place to keep it secured. Cloud security vs. on-premises security is a driving factor when deciding how to set up your infrastructure, so let's review the differences in detail.

On-Premises Security

Managing your security on-site involves storing your data and servers at your office. If there is a system or hardware failure or a power outage, you must have a backup and recovery plan. But in the case of a network or power outage, there's nothing you can do until service is restored.

In an on-premises environment, you can choose to outsource the maintenance and management of your data centre, but ultimately you are responsible for keeping the infrastructure running.

Securing your data on-site may also be attractive for organizations that have strict regulatory standards with which to comply. In some cases, it may be the only way to confirm that those standards are met.

Scaling can be complex with on-premises security, however. You will need to buy more software and servers to accommodate a growing business.

Cloud-Based Security

Cloud-based security is comprised of two main components. The first is the security of the hardware infrastructure within physical data centres for which the cloud platform provider is responsible. The second is the security within resources that the customer deploys onto the infrastructure. In the cloud, you only have to worry about the latter. The cloud company will ensure that the physical facilities are secure. You only have to worry about ensuring that the data you place in the cloud is encrypted, your passwords are secure, access to your account is on an as-needed basis, and so on. If you were running your workloads in an on-premises data centre, you'd have to worry about both sides of the equation, leading to sleepless nights.

In the cloud, if there were an outage in the region in which your applications are running, you can easily kick-off an automated process to re-deploy your infrastructure into a different region, enabling you to be back up and running in minutes. With a bit of foresight, you can have your infrastructure partially or fully deployed and ready to go in another region, so you can automatically switch your infrastructure over if things go pear-shaped in your primary region.

Some organizations have concerns about relying on cloud security, but Gartner estimates that the customer causes 95% of cloud-based security failures. For example, when someone leaves resources like S3 buckets open to the public, falls for a phishing scheme, or uses a basic password without rotation policies or MFA (multi-factor authentication).

What about Staffing Needs?

Staffing needs should also be considered when analyzing cloud computing vs. on-premise computing.

When you manage servers and equipment on-site, you need to have IT personnel dedicated to maintaining it. They must troubleshoot and address problems and let their leaders know when it is time for an upgrade.

However, how large does the team need to be? What kind of experience should they have, and what training does the organization need to provide?

Answering these questions when you operate a small business can be challenging. You know that they need skills related to the specific servers and networks you use, but other requirements can be confusing to narrow down without having your own technical experience.

For instance, they will need to order equipment and estimate when things need to be replaced. The goal is to avoid system downtime and maximize operational efficiencies!

Big organizations may be able to afford an entire IT team. It may be worth having dedicated staff monitor networks, databases, and other internal computing needs - but this won't come cheap.

If you cannot come up with a significant budget for your staffing needs, you should consider choosing cloud. This option will not require you to hire a separate team to manage and support your infrastructure since your cloud provider will handle all of that for you!

Another advantage of leveraging your cloud provider instead of staffing an on-site team is that you get access to experts in the field that know exactly how to manage your infrastructure. Their expertise will help you make the most out of your databases and networks without developing the knowledge in-house.

So, Which Option is Better?

On-premises and cloud both have their pros and cons. Determining which is the best option for your organization is up to you - but you don't have to make the decision alone!

At Pilotcore, our cloud consultants can help you choose the best infrastructure for your business and workload needs. As AWS experts, we can even work with you to implement a hybrid solution that gives you the best of both worlds - while ensuring that you optimize costs and performance.

Our goal is to help you harness the power of the cloud so you can take your business to the next level. Contact us today to learn more about how we can help!

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