By SolarWinds MSP

Today’s businesses can decide between on-premises vs. cloud solutions for just about every element of their IT services, including software, servers, storage, backups, security, and enterprise resource planning (ERP). The cloud is becoming increasingly popular, but on-premises or “on-prem” implementations retain a vital role. Each solution has its own advantages and disadvantages. As a managed services provider (MSP), it’s your job to make sure your customers make the choice that’s right for them. In this article, we’ll investigate cloud vs. on-premises pros and cons, as well as how to help your customers pick the best fit for their needs.

What is the difference between on-premises and the cloud?

On-premises servers are the traditional enterprise computing model. In this implementation, all hardware and software resides in house. A business purchases and maintains its own servers, located in a secure, climate-controlled room onsite. The company needs specialized IT support to manage the equipment, as well as appropriate HVAC systems to keep the equipment in working order. IT professionals must stay up to date with the latest software updates and perform regular backups. As the business expands, it needs to procure new hardware to meet its growing demands.

In the past couple of decades, cloud computing has emerged as an alternative or compliment to on-premises infrastructure. In contrast to on prem, cloud solutions mean that businesses rely on servers that exist offsite — sometimes hundreds or even thousands of miles away from their offices. By paying a monthly fee for access to massive data centers, a business is able to store its data on a small portion of those remote servers. The cloud provider takes care of maintenance, backups, software updates, power and HVAC. The customer then relies on the internet to access its IT systems. Today’s leading cloud providers are large multinational corporations such as Amazon Web Services, Google Cloud and Microsoft Azure.

Is the cloud more secure than on-premises?

The security of the cloud vs. on-premises is a key consideration in this debate. Cloud security controls have historically been considered less robust than on-prem ones, but cloud computing is no longer a new technology. Nowadays, more and more businesses are trusting the cloud for their security needs.

A company running its own on-premises servers retains more complete control over security. They are responsible for setting appropriate user access policies, installing firewalls and antivirus software, ensuring security patches are installed promptly, and guarding against cyberattacks. This degree of control can be something of a double-edged sword. For a business with appropriate IT support, on-premises solutions give companies confidence that their servers are locked down — they don’t need to trust another company with their private data. On the other hand, if mismanaged, on-prem servers can leave an organization vulnerable to security threats.

Data security in the cloud, on the other hand, is handled by the cloud provider. Before choosing a cloud solution, it’s essential to learn about their security protocols. Is the data center protected from intruders? Is software kept up to date with the latest security fixes? What measures are in place to protect against cybercriminals and catastrophes? The largest cloud providers have robust security teams and tight procedures. Yet with all the sensitive data they store, they present a tempting target for hackers.

Cloud security controls are particularly risky for businesses in …

… highly regulated sectors. Health care companies must comply with the Health Insurance Portability and Accountability Act (HIPAA), educational institutions are subject to the Family Educational Rights and Privacy Act (FERPA), and organizations handling credit card payments have to follow the Payment Card Industry Data Security Standard (PCI DSS). Enterprises subject to these standards need to know exactly how their data is secured, which is difficult when storing data in the cloud. Nevertheless, more and more cloud providers are beginning to offer services that are aligned with these regulations.

What are some advantages of cloud computing vs. on-premises?

Aside from security, there are many other factors that go into the on-premises vs. cloud decision:

On-premises servers require a substantial upfront investment in procuring hardware, hiring staff to maintain it, and buying software licenses. Running the servers means significant expenditures for electricity and cooling systems. As the hardware reaches the end of its life cycle, repair and replacement costs arise.

For these reasons, companies often choose the cloud as a cost-saving measure. For a cloud user, the only charge is a monthly fee. There are also accounting issues to consider: On-premises servers are a capital expense, whereas access to cloud servers is an operational expense. Eventually, an on-premises server vs. cloud costs could potentially equalize, as the high upfront cost of on-prem servers is offset by the lack of a monthly fee. However, maintenance and equipment replacement may end up adding ongoing costs for onsite servers.

Customization is another key factor to consider. On-premises solutions are infinitely customizable, while cloud computing offers limited options. For a small organization with simple IT needs, using the cloud is likely the easiest way to go. But for a large organization with complex IT requirements, the customization allowed by on-prem can make a critical difference.

Every business wants maximum uptime. After all, time is money — whenever systems are down, you are missing opportunities to reach customers. In this regard, the cloud and on prem both offer distinct advantages and disadvantages. Access to the cloud relies on a broadband internet connection. If the internet goes down, you’ll lose access to your cloud data. On-premises data remains in house, so no internet connection is needed and the data is always available. However, when it comes to the servers themselves, the cloud is likely to be more reliable. On-prem solutions rely on a limited number of servers; redundancy is cost prohibitive. If your local server is not working properly, your productivity will be greatly hampered. In contrast, gigantic cloud data centers are highly redundant and guarantee a certain level of uptime. If one server breaks, customers may not even notice.

Scalability is an area where the cloud has a clear advantage. If a company with on-premises servers experiences a jump in computing needs, it has no choice but to invest in expensive new infrastructure. If the company’s needs later decline to previous levels, it remains saddled with excess capacity. The cloud is much more scalable. Data centers allocate computing resources to meet demand at any given moment. As a customer’s demand increases, their data will automatically expand to additional cloud servers. If the demand later contracts, server use will shrink, lowering the monthly cost. This factor alone makes the cloud a valuable option for startups and other fast-growing businesses.

As you can see, there’s no obvious winner in the cloud or on-premises debate. All organizations must choose the right solution for their own unique needs. Because cloud and on-prem solutions both have many advantages and disadvantages, many enterprises are now going hybrid — using the cloud for some services while keeping others in house. Hybrid solutions enable businesses to reap the advantages of both cloud and on-prem models.