Today, businesses run on huge amounts of data. Data is the backbone of most business decisions and hence data storage and management is a huge question. Businesses today have many choices when it comes to data storage. The obvious choice is to rely on traditional, time-tested legacy and on premise applications and software to do business. The other emerging option is to use the cloud to host your data as against just keeping everything within your own network.


“On-prem” refers to private data centres that companies house in their own facilities and maintain themselves. The on-premise software delivery model installs and operates from a company’s in-house server and computing infrastructure. It requires in-house server hardware, software licenses, integration and active support from the IT wing of the organization in order to function.


“Cloud” computing is all about storing and accessing data from a traditional or public cloud. You can access programs and applications you are using over the internet instead of storing and accessing the same thing from your computer’s hard drive or a server somewhere in the building. Typically, a third-party service provider owns and manages the cloud, and makes computing resources available for consumption on a need basis.


There are a number of fundamental differences between an on-premises and a cloud environment. Moreover, it is important to understand them so that you can make an informed decision on which one to deploy for your data storage needs. Some of the key factors in this decision are listed here with reference to both cloud and on-prem context.

  • Deployment – In an on-premises environment, resources are deployed in-house and within an enterprise’s IT infrastructure. An enterprise is responsible for maintaining the resources and the solution. However, in a cloud environment, resources are hosted on the premises of the service provider but enterprises are able to access those resources and use as much as they want at any given time.
  • Cost – Enterprises that choose on-premise need to invest in the software, hardware, and infrastructure for the deployment. They are also responsible for the maintenance and upgrade of the environment, and for ongoing costs of the server hardware, power consumption, and space. On the other hand, in a cloud deployment, you only need to pay for the resources that you use, with none of the maintenance and upkeep costs. The cost also varies based on consumption.
  • Control – In an on-premises environment, enterprises retain all their data and are fully in control of what happens to it. In a cloud-computing environment, the question of ownership of data is not that simple – the data may belong to the enterprise, but the actual storage of the data and its encryption keys reside within the third-party provider.
  • Security – Control automatically leads us to the question of security. Companies that have extra sensitive information, such as government and banking industries must have a certain level of security and privacy that an on-premises environment provides. Security concerns remain the number one barrier to a cloud computing deployment. There have been many publicized data breaches such as loss of personal information of employees, login credentials to a loss of intellectual property. Therefore, the security threats in the cloud are real.
  • Compliance – Several industries implement very strict regulatory control or policies. Some examples include the healthcare industry, the banking industry, the government/educational institutions, etc. For such enterprises, it makes sense to keep their data handy at a place where they can exercise control and ensure compliance. So on-premise makes sense for them. Enterprises that do choose a cloud-computing model must do their due diligence and ensure that their third-party provider is also compliant with all of the different regulatory mandates within their industry. Sensitive data must be secured, and customers, partners, and employees must have their privacy ensured.
  • Time for deployment – If enterprises opt for on-premise deployment, then you need to plan for a considerable time for procuring infrastructure, setting the environment, configuring it for use, etc. Cloud computing, on the other hand, provides nearly instant provisioning because everything is already configured. Thus, any new software that is integrated into your environment is ready to use immediately once a company has subscribed. With instant provisioning, any time spent on installation and configuration is eliminated and users are able to access the application right away.
  • Agility and Scalability – Cloud deployments tend to be more agile and scalable since the third party provider is responsible for setting up whatever is required by the enterprise. Scaling up and down as per the business need is, therefore, a simpler task. Since on-premise deployment needs investment in terms of hardware, software, and setup, the agility is lower than in cloud and the time and ease in scaling up and down is far lesser too.


Based on all the factors discussed above, here are some broad guidelines that can be used to make this decision. Note, however, that these are recommendations only, and the actual choice would depend on your specific business needs and context.

Choose on-premises architectures when:

  • Security is a focal point of concern, and you cannot take data risks
  • Regulatory policies and controls are stringent and need data to be closer home and under control
  • There are government rules and regulations that bind usage and storage of data
  • Legacy systems are not easily movable or replicable.
  • Time and efforts to migrate systems from on-premise to cloud is humungous and cumbersome

Choose cloud architectures when:

  • You need flexibility and agility to scale and grow
  • You are uncertain about the scale of operations you need in place and would like to have the ability to scale up and down on demand
  • You want malleability and configurability of the environment on demand
  • You want the cost benefits provided by the flexibility of operations and lack of investment in infrastructure
  • You do not want to invest in infrastructure and licenses and would rather pay-by-use for services utilized
  • You do not want to expend resources and time to maintain the infrastructure, hardware, and software, attend to bug fixes and corrections in environment
  • You want a quicker time for deployment, agile setup, and faster turnaround of operations.


Cloud-based deployments have made business software more accessible than ever, and the majority of businesses today are choosing it over on-premise because of cost, agility, and ease of use. On-premise solutions are still a viable option for companies with serious security concerns and specific regulatory and control needs. Enterprises should evaluate their business needs well and deliberate on what each option has to offer, before choosing either cloud or on-premise.

Once the decision on the cloud has been made, there is the other big decision on which third-party provider to select. There are various options available and, once again, you need to consider various factors while choosing the right provider for your needs. However, we shall cover that in our next blog “How to Choose the Best Cloud Providers in the Market” – watch out for it.