On-premises vs cloud: Choosing the best approach

No matter what side you lean toward in the on-prem vs Cloud battle, it is vital to have a well-defined hosting strategy to avoid over-, under-investment, or other issues. You must clearly understand what infrastructure (on-premises or Cloud) better meets your business needs. How to do it? You should consider various factors, such as security concerns, your infrastructure budget, and many others. What others – we will answer in this article. 

So, what are the benefits and drawbacks of on-premises and Cloud infrastructure? How different are costs, maintenance and support, scalability, security and compliance, and customization of on-prem vs Cloud? How do you determine whether on-premises or Cloud solutions best fit your business? Read on to discover. 

On-premises vs Cloud: difference

On-premises solutions refer to software installed and operated within a company's physical infrastructure, such as on-site servers. These solutions are typically managed by the company's IT department and offer greater control over data security, customization, and integration with existing systems. However, they require a significant upfront investment in hardware and ongoing maintenance costs. 

Cloud solutions, on the other hand, are accessed remotely via the internet and hosted on servers owned and maintained by third-party providers. They offer greater scalability, cost-effectiveness, and flexibility but can have limitations regarding customization and data security.

Here are the key aspects where you can find on-premises vs Cloud differences. 

1. Cost. On-premises requires an upfront investment in hardware and skilled IT personnel for maintenance, while Cloud solutions are typically subscription-based and are more cost-effective options, as you pay only for resources you use. However, the latter requires regular Cloud infrastructure audits only a vendor with robust Cloud expertise can provide. 
2. Scalability. On-premises solutions are limited by the available physical resources. Cloud, at the same time, can scale up or down as needed, making it more flexible and adaptable to changing business needs. Cloud computing allows businesses to easily adjust their computing power, storage, and network capacity based on demand. Whether you need to accommodate a sudden increase in traffic or scale down during slower periods, Cloud services provide the flexibility to meet your requirements without investing in additional infrastructure.
3. Maintenance and upgrades. On-premises infrastructure requires ongoing maintenance and upgrades. Cloud solutions, at the same time, are maintained and upgraded by the provider — be it AWS, Azure, GCP, or any other Cloud hypescaler available in the market. Cloud service providers handle the maintenance of the underlying infrastructure, including hardware upgrades, security patches, and software updates. They take care of these tasks behind the scenes, freeing up your IT team from routine maintenance activities. 
4. Customization. On-premises can be customized to fit specific business requirements, while Cloud solutions may have limitations on customization depending on the provider. However, keep in mind that on-premises customization can be way more expensive than doing so in the Cloud. What’s more, you can opt for a multi-Cloud approach to customize the Cloud infrastructure as close to your business needs as possible. 
5. Security. On-premises offers greater control and security over data. And even though many businesses are afraid that the Cloud may pose data security risks, major Cloud providers offer great security levels as well. Moreover, if there are the tiniest risks left – they can be mitigated altogether if you choose a reliable tech partner. Such a partner can help you make the most of your Cloud and has established data security practices. 

Choosing right between on-premises vs Cloud: why is it important?

Choosing right between on-premises vs Cloud has a significant impact on your operations. A wrong choice can lead to: 

• inefficient processes
• higher costs
• lower productivity
• data security risks

It is crucial to assess your specific requirements, budget, and resources before making a decision. Meanwhile, selecting the right option can streamline your operations, improve productivity, and achieve long-term growth.

Now, let’s view the disadvantages and benefits of Cloud vs on-premise. 

Pros and cons of on-premises solutions

Pros:

• Greater control and security: Since the software and data are stored on-site, businesses have complete control over the security and access of their information. It is one of the reasons why businesses in financial services tend to go on-premises for sensitive data storage. 
• Customization: On-premises solutions can be customized to fit specific business requirements and integrate with existing systems. However, if your business needs change frequently – the on-premises vs Cloud battle will be overtaken by the latter. 
• Reliable performance: The system's performance is not dependent on internet connectivity, which can ensure reliable and fast performance.

Cons:

• High upfront costs: On-premises solutions require a significant upfront investment in hardware, software, and IT personnel to manage and maintain the system.
• Limited scalability: The system's scalability is limited by the available physical resources, making it challenging to scale up or down as needed. 
• Maintenance and upgrades: Your company is responsible for maintaining and upgrading the software and hardware, which can be time-consuming, costly, and require internal expertise. Cloud, at the same time, is managed by a Cloud vendor that spares your resources. 

Read more about the best practices for Cloud security 

Pros and cons of Cloud solutions

By examining both sides of the equation, you can effectively evaluate whether Cloud solutions align with your specific needs and objectives. 

Pros:

• Cost-effectiveness: Cloud solutions eliminate the need for significant upfront investment in hardware and IT personnel, making them a more cost-effective option.
• Scalability: Cloud solutions can scale up or down as needed, making them ideal for businesses with fluctuating demands.
• Remote accessibility: Cloud solutions can be accessed from anywhere with an internet connection, making it easier for remote workers to collaborate and access information.

Cons:

• Data security risks: The reliance on third-party providers to store and manage data can pose risks to data security and confidentiality. 
• Limited customization: Cloud solutions may not offer the same level of customization as on-premises solutions, making it challenging to integrate with existing systems and processes.

Overall, Cloud solutions are a good fit for businesses with limited budgets, fluctuating demands, and remote workers. However, they may not be the best choice for businesses with specific security requirements or those who require high levels of customization and integration with existing systems.

Read more about Cloud cost optimization

Choosing the best fit for your business case

Choosing between on-premises and Cloud solutions requires careful consideration of several factors, including:

• Business needs: You need to assess your budget, resources, scalability requirements, security needs, and customization requirements in order to choose between on-prem vs Cloud.  
• Cost: When it comes to Cloud vs on-premises comparison, you have to assess the costs of on-prem vs Cloud, including upfront and ongoing maintenance costs, as well as estimate the total cost of ownership in the long run. The on-premises-only approach is far from the best when it comes to cost optimization. Basically, you are paying for capacity you might not use or struggle to keep up with the increased loads in the high season. Therefore, many businesses use the Cloud as an extension of their data center not to buy equipment but to use computing resources. 
• Scalability: Many companies have peak workload periods, for instance, Black Fridays and the holiday seasons for retail. So, businesses need to consider whether their demand for resources is likely to change over time and whether they require a solution that can scale up or down quickly. To handle high workloads, one option is to acquire a Cloud approach, as it is easier to scale Cloud resources and then turn them off later. 
• Security: It is critical for you to assess your security requirements and determine whether on-premises solutions or Cloud solutions offer the level of security you need. For instance, organizations that work with sensitive data (e.g., financial institutions) must pay utmost attention to security. That is why they must only partner with vendors that comply with regulations such as PSI DSS required for companies that accept card payments and process and transmit cardholder data. 
• Expertise: Carefully assess your internal technical expertise and determine if you have the resources to manage and maintain an on-premises solution or if you require a Cloud solution that is managed by a third-party provider. What’s more, technical skills are only one of the things that matter, as your tech partner must have a profound understanding of the industry domain you work in. It means you need to look for a technology partner with relevant experience in your domain.

Ultimately, deciding between on-premises and Cloud solutions depends on a company's unique needs and circumstances. It's essential to carefully assess all of these factors before making a decision to ensure that the chosen solution is the best fit for the business. But no matter what you choose between on-prem vs Cloud – N-iX can help you build innovative solutions that will take your business to the next level. 

Read more about the 5 ways to make the most of Cloud outsourcing

Here are some examples of businesses that have already benefited from Cloud and on-prem integration with N-iX. 

On-prem and Cloud: N-iX success stories

1. Developing architecture for the leading automotive technology company

Our client partnered with N-iX professionals to contribute to their digital transformation journey. As car vendors relied on them as their primary customers, there was a pressing need for a centralized management system to consolidate all car development-related information. The existing process of gathering the required statistics for presentations and determining the stage of car development was time-consuming, often taking up to six months.

To address this challenge, our client sought the development of a unified management system that would streamline the collection and organization of car development status information. This system aimed to provide a single platform where all relevant data could be accessed efficiently.

The client has requested the creation of a virtual prototyping management system that would serve as a centralized coordination toolset. This system required a well-structured and unified data model to manage and coordinate various aspects of virtual prototyping effectively. The customer's existing on-premises solution no longer sufficed in meeting the changing needs of their clients. Consequently, our client made the decision to migrate a part of this solution to the Cloud, leveraging its advantages and capabilities.

Together with us, this client managed to:

• Create a comprehensive unified vehicle architecture and simulation management system that empowers car vendors to manage the entire development process seamlessly. This advanced system not only facilitates efficient project management but also allows car vendors to conduct virtual tests, eliminating the need for up to six months of manual work typically required to gather necessary statistics.
• Cover all product phases of the product lifecycle, from initial discovery to knowledge transfer after a product development cycle. We have provided extensive support throughout the deployment process, ensuring smooth integration into the end-client environments;
• Expand the architecture building blocks repository by incorporating new components. This enhances their system's versatility and empowers car vendors with a broader range of options when designing and building their vehicle architectures.

2. Delivering Cloud-agnostic solution for Telit

With over 20 years of experience as a pioneer in the Internet of Things (IoT) industry, Telit has established itself as a leading global manufacturer. The client specializes in delivering products designed for companies that require mission-critical connectivity and enterprise-grade performance.

To address their need for a more flexible and customizable IoT management portal, the client engaged N-iX. They sought to remove legacy code that was causing production bugs and modernize their solution to allow customers to install the IoT portal in their own environments.

Collaborating with us, the client successfully leveraged the advantages of both on-premises and Cloud technologies. Our team made their solution Cloud-agnostic by migrating services to containers within a Kubernetes cluster. Furthermore, comprehensive load tests were conducted on three major Cloud providers: AWS, GCP, and Microsoft Azure. We implemented a robust CI/CD pipeline to streamline the development and deployment processes. In addition, the portal's monitoring functionality was enhanced through integrations with third-party tools. To ensure seamless installation, a detailed technical guide was created, providing instructions for deploying the solution in the customer's environment.

Read more about: Cloud agnostic development: Pros and cons, tips and tools

3. Creating a communication system for the international technology provider

Our client is an innovative company at the forefront of leveraging blockchain and artificial intelligence technology to accelerate and scale financial and non-financial transactions.

Our team of professionals faced several technical challenges in meeting the client's requirements. One such challenge involved developing a robust communication system to enable rapid money transfers between banks. The system had to prioritize high-level security measures while maintaining scalability, as it was anticipated to handle approximately 1,000 financial transactions per second on the blockchain platform.

Additionally, the client employed a combination of on-premises and Cloud approaches for their solution. In order to fulfill their diverse requirements, our team of experts has:

• Implemented a highly distributed application that can be deployed in a Cloud-agnostic environment, allowing the client to seamlessly switch between different Cloud providers or utilize on-premises infrastructure as needed.
• Developed an application-level load balancer to ensure optimal scalability and resilience. This load balancer intelligently distributes the incoming traffic across multiple servers, maximizing the system's capacity to handle increased workloads.
• Ensured fault tolerance by carefully designing replication and partitioning mechanisms. These mechanisms guarantee that data is replicated across multiple nodes, preventing single points of failure and enabling continuous operation even in the event of failures or disruptions.

By incorporating these strategies, our experts have successfully built a highly scalable, resilient, and fault-tolerant system for our client, accommodating their diverse deployment needs and ensuring the smooth operation of their solution.

Our experts have helped the client to:

• Expand user outreach by making the system Cloud-agnostic, allowing the client to reach a wider user base and adapt to various infrastructure environments seamlessly.
• Significantly reduce the time required for money transfers from three days to just one hour, enhancing the efficiency and speed of financial transactions.
• Accelerate transaction handling capabilities from 1,000 transactions per second to 20,000 transactions per second, enabling the system to handle high volumes of transactions efficiently.
• Enhance the system's security through the implementation of private keys, service replications, and intricate routing mechanisms. 

Why implement on-premises and Cloud solutions with N-iX? 

1. The company boasts an extensive talent pool consisting of over 200 highly skilled specialists ready to contribute to the success of your project delivery;
2. N-iX is an AWS Consulting Partner and a Microsoft Solution Partner that allows us to provide a wide array of sophisticated Cloud-based solutions to our clients;
3. Our team comprises over 400 experienced Cloud engineers who possess in-depth expertise in working with renowned Cloud hyperscalers;
4. Our portfolio includes 150+ Cloud projects successfully completed in the last five years, gaining ISG recognition for excellence in public Cloud services;
5. N-iX has established itself as a leading provider with strong expertise in a wide range of technologies, including Cloud computing, Big Data, Data Science, Business Intelligence, and numerous others;
6. N-iX is a global software development company with offices and development centers across Europe and the USA.