Cloud vs. on-premises infrastructure: What’s the difference?

Indeed, as organizations map out a technology strategy, there are numerous factors to consider when choosing between these two types of IT environments. This includes underlying business requirements, the internal skills needed to manage resources, the overall cost associated with a particular approach, regulatory and compliance standards, and security needs. In fact, the vast majority of organizations rely on both cloud computing and on-premises systems to run their businesses.

• Infrastructure-as-a-Service (IaaS), which delivers fundamental compute, network, and storage resources.
• Platform-as-a-Service (PaaS), which allows an organization to develop, run, and manage its own apps.
• Software-as-a-Service (SaaS), which includes software hosted on a vendor’s system.

Cloud computing is appealing for several reasons. The responsibility for upkeep, patching, and overall system management resides with the service provider. There’s no major upfront investment in servers, systems, or software, and users pay only for the resources they use — as clouds use an operating expense, or OpEx, model.

Also, it’s possible to achieve higher resiliency because systems and data are typically co-located in different geographies. So, if one site goes down, another takes over instantly. This also aids in data backups and disaster recovery.

Because cloud providers handle tasks such as provisioning and configuring settings — and they have enormous resources on hand — it’s possible to achieve greater agility, flexibility, and scalability than what’s possible with on-premises systems.

In the case of IaaS, for example, this means that organizations can adapt quickly to major fluctuations in demand, and they can make changes without adding actual physical resources. Clouds also allow organizations to reduce the staff required for technical tasks or to redirect IT teams to more strategic tasks.

In addition, cloud service providers typically offer the most up-to-date features — and they support highly flexible and compatible containers, microservices, and service-oriented architectures (SOA). This is attractive to companies looking to build out and integrate digital technologies such as the Internet of Things (IoT), artificial intelligence (AI), robotics, and extended reality (XR). Clouds also can simplify DevOps and support other agile development practices.

An advantage to this approach is that an organization retains total control over hardware and software, along with settings and configurations. This may be an important consideration for organizations with strict security requirements or regulatory concerns. For example, a company may need to keep certain data outside a particular country’s borders.

However, an on-premises IT or data environment means that an enterprise must manage all resources on an ongoing basis. As a result, capital expenditure (CapEx) may be higher up front, and there’s a periodic need to refresh, upgrade, and patch hardware and software systems. It’s also necessary to manage licenses, handle integration between and among systems, and address performance issues or component failures as they arise. If something breaks — such as a server — it’s up to the organization to fix or replace it.

In some cases, the choice between cloud and on-premises frameworks may be a moot point. This includes situations where there’s a need for specific hardware components, networking capabilities, or software. However, the vast majority of providers now offer their platforms, services, and software in the cloud — and many also support hybrid environments. This provides the flexibility that some organizations require.

Choosing between cloud and on-premises

Organizations must carefully review and analyze their business and IT requirements — with an eye toward the future. As companies look to put various digital technologies into play, there’s a need for greater agility, flexibility, and scalability. Understanding what works best in a given situation is essential.

Selection criteria for cloud vs. on-premises infrastructures typically focus on five main areas:

• Performance. In most cases, cloud systems deliver the highest level of performance and availability. They also provide the latest features and incorporate application programming interface (API) frameworks that make it easier to connect applications and processes. But in some cases, an enterprise may have specific compute, network, storage, or software requirements that aren’t available through the cloud.
• Deployment and management. A huge advantage of cloud-hosted environments is the ability to deploy resources quickly and adjust them dynamically. Development can also take place faster in the cloud, particularly with today’s low-code or no-code tools. In most cases, organizations can gain a centralized view into operations and security controls. This can also simplify administrative and management tasks.
• Costs. The primary financial difference between cloud and on-premises systems is CapEx versus OpEx. A CapEx model requires an upfront investment in hardware and software. It also introduces a need to refresh and even replace resources on a regular basis. On the other hand, an OpEx model works like a subscription or within a framework of paying only for the resources the organization actually uses. It may incur higher direct costs but prove less expensive because of fewer staffing needs.
• Control. In a cloud environment, an organization cedes control of hardware and software choices. The cloud provider makes these decisions on its own. What’s more, because data typically resides in the cloud, any failure — though rare — may leave an organization unable to use its data until service resumes.
• Security. Cloud-based technology typically delivers strong security. In fact, it often exceeds what companies can achieve internally. Yet, there are situations when data must remain on-premises. This may include healthcare data and financial data — both highly regulated industries. It’s also important to note that while cloud providers typically offer state-of-the-art security, they aren’t responsible for many security problems that occur outside the cloud environment, including those triggered by ransomware.

Download a cloud-native security checklist to evaluate security features and protect your data

What is a hybrid cloud?

In many cases, organizations rely on the public cloud for computing power, networking, storage, and software. Consequently, they share systems and server space with other companies — though each user’s data remains separate and secure. Private clouds are virtual environments set up on a company’s own servers. They combine the capabilities of clouds with on-premises hardware and software, but they may require considerable staffing and resources to operate effectively.

Today, many organizations rely on hybrid clouds that incorporate elements of public clouds and on-premises models. In a hybrid cloud, resources and software run in a combination of public and private cloud environments. This often appeals to organizations that require data flexibility or need to use elements of both cloud and on-premises systems and software.

Navigating clouds vs. on-premises

It’s vital to understand how each approach impacts various factors, including:

• Performance and scalability
• Storage needs, software maintenance, and patching
• Data security and regulatory compliance
• Data backup and recovery
• Overall hardware maintenance and IT administration

As organizations venture deeper into digital technology, cloud adoption will continue to grow. Still, there are cases where on-premises will remain the better choice. In the end, it’s critical to understand whether public cloud, private cloud, or on-premises delivers the right set of features and capabilities for each particular organization.

The OutSystems low-code application development platform supports building and deploying applications in cloud, on-premises, and hybrid environments. To learn more about our platform, visit the Evaluation Guide.

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