On-Premise vs Cloud: What’s the Better Option for Your Business?

Should we consider having an On-Premise system or should shifting to Cloud be a better option? Businesses often tend to be in turmoil when it comes to deciding between the two. And we might not be wrong to assume that you are here for the same reason. If you are wondering what would be the best for your business, stick with us till the end, and you might have an answer. In this blog post, we will be doing an “On-Premise vs Cloud” comparison by highlighting their pros and cons along with the factors that you should consider before making a final call. This should also help the novices to understand the difference between ‘on premise and cloud.’

What is an On-Premise System?

An On-Premise system refers to software that is installed locally, i.e., on your business’ servers and hardware. That being said, all the services are run, managed, and maintained from within the organization in their own servers and hardware. The organization purchases the software’s license in order to use it.

Pros/Benefits of On-Premise

Here are a few reasons why you should consider the On-Premise system instead of cloud computing.

1. Better Control

Since the software is licensed and everything related to it resides within the premises of the organization, businesses have better control over it. The ownership lies with them, and no one but them gets to take a call on the configuration, upgrades, and system changes.

2. Doesn’t Require Internet Connectivity

With an on premise system in place, you do not need to rely on Internet connectivity or other external factors to access your software. Thus, productivity won’t be hampered because of an unstable Internet connection, and somewhere, you will also save on the associated costs.

3. Increased Security

Because the data can be stored offline, the on premise system/software is less vulnerable to cyberattacks. It prevents hackers from infiltrating your system and causing a data breach, which otherwise can be possible if it is available remotely. Though security-wise, cloud platforms are secure too, if we consider the top cloud service providers.

Cons/Risks Associated With On-Premise

Mentioned below are some reasons you might not want to opt for On-premise software.

1. High Maintenance

The maintenance cost is on the higher side in an on-premise system when compared with the cloud. This is because you are solely responsible for everything related to the software including data backups, storage, data recovery, and other things that the software demands. We haven’t yet considered other involved costs such as the software license, setting up the server, etc.

2. Scaling Issues

Having an on-premise system means having a fixed amount of physical storage. So, in case you need to scale up in the future, i.e., increase the storage space, this would require some planning and effort. You may have to install new hardware or build a new system which can be both expensive as well as a time-consuming process.

3. Risk of Data Loss

In an on-premise environment, you run the risk of data loss if the system malfunctions. The software is also at risk of ransomware, for which you may have to pay a hefty sum of money.

What is Cloud Computing?

Cloud computing refers to hosting services virtually rather than on a physical local server. This simply means that the services can be availed via the web. In a cloud environment, there will be a third-party cloud ERP vendor who will host everything for you.

Pros/Benefits of Shifting to Cloud

Here’s why shifting to Cloud would prove beneficial to your business.

1. Accessible Anytime, Anywhere

Unlike an on-premise system which can only be accessed when you are within the organization’s premises, a cloud environment lets you access services or files from anywhere, anytime. This is extremely important from today’s point of view where most of the employees are working remotely.

2. Pay Only For What You Need

There are no upfront costs involved in a cloud environment. You are only required to pay for the resources that you need or use, and can easily scale up or down depending on the usage. Most cloud providers offer monthly subscriptions for the services they provide, so you can pick the ones that are most important and save on costs on the ones that are of little to no importance.

3. No Maintenance Headache

Outsourcing services to a cloud vendor means that you do not have to worry about software maintenance or upgrades whatsoever. Everything is handled by the cloud service provider itself, which means that you and your in-house team would have more time to focus on the business’ core competencies.

Also Read: In-house vs Outsourcing

Cons/Risks Associated With Cloud

There are certain drawbacks that you may feel by shifting to a cloud-hosted environment.

1. Connectivity

You need to have a fast and stable Internet connection to access cloud services. A slow connection will not only cause a troublesome experience but also hamper your workflow and productivity.

2. High Scalability Cost

While it is easy to scale storage in a cloud-based environment, the costs can significantly increase if the storage isn’t managed properly. This is because it’s a consumption-based service- the more services you require, the higher the cost.

On-Premise vs Cloud Comparison

The core difference between on premise and cloud is where they reside. While the latter is about storing data and files in a virtually-hosted environment, the former stores data locally.

Now that you have understood both, it should be easy for you to pick one that would best suit your business needs. Nevertheless, we have brought down all things to a few key factors that you can consider while making a choice between on-premise and cloud computing.

1. On Premise vs Cloud: Cost

The costs involved with on-premise software are comparatively higher than what you would spend in a cloud environment. In the former, the enterprise would have to bear all the costs of the software including its setup, maintenance, etc. whereas in the latter, these are managed by the third-party vendor. All you need to do is pay a fixed amount to the provider for the resources that you want to use.

2. On Premise vs Cloud: Security

Speaking of the security level in on-premise software, it seems more secure since it offers good protection against cyber attacks. But the probability of malfunctioning is high in this case. Now if we talk about security in the cloud, there do remain security concerns as cloud breaches have been reported in the past, but there are very few chances of any hardware/software malfunctioning that can create hindrance in the workflow and result in additional costs.

3. On Premise vs Cloud: Control

Enterprises are in complete control of what happens to their data in an on-premise environment. This is one of the major reasons why a lot of companies don’t prefer or hesitate to switch to a cloud environment where data and encryption keys reside with the vendor. So in case, there is downtime or anything unexpected occurs, you may not be able to access the data.

Final Call

Both Cloud and On-premise software are excellent in their own ways. But considering today’s scenario, moving to a cloud-hosted environment would be the ideal choice. Yes, an on-premise system brings a level of security and control that the Cloud doesn’t, but the latter removes the hassle of configuring or maintaining and updating the system, thus allowing you to invest your complete time, money, and resources into your core business strategies. Plus, you have real-time access to the system regardless of the location.

Consider every factor, every pro and con, and then decide for yourself. What would be your pick between cloud and on-premise?