What is the difference between on-cloud and on-premise infrastructure? Which is better for my business?

I will never forget the 2020 pandemic and its lasting impacts on how we view and conduct work. Overnight, our MSP was responsible for moving 3000 endpoints to cloud-based solutions. Certainly, we had business continuity plans, but an overnight switch to remote work across the entire client base was a whole different type of problem to solve. During this time, our team quickly deployed remote access solutions and began plans to migrate several clients to the Azure cloud (Microsoft’s cloud-based server offering). Since then, most clients have had to make a major decision when procuring new servers or applications:  on-cloud or on-premise. Understanding the differences between these models can help you choose the best fit for your small business. As much as cloud-based solutions are much easier for IT staff to manage and for end users to work with, it's not a one-size-fits-all solution. There are some instances where an application or business would be best served using an on-prem solution. Let’s look at cloud solutions, what we mean by it, and how to determine if this might be a fit for you.

On-Cloud Infrastructure

• Location: Data and applications are stored and accessed remotely on servers owned and managed by a third-party cloud provider. Examples include Microsoft Azure, AWS (Amazon Web Services), and Google Cloud (also called Google Enterprise). There are also several smaller, third-party providers for you to set up cloud-based servers. I would also consider SaaS (software as a service) solutions into this category since, technically, these providers own the infrastructure and software and provide them to you for a specific fee.
• Benefits: Scalability, flexibility, cost-effectiveness, and reduced maintenance. By far, the most advantageous part of this type of architecture is the scalability. Do you need more hard drive space? No need to buy a drive, migrate data, and install the hardware like an on-prem install. In the cloud, you just expand the drive you are using. You can dynamically add RAM, CPU Cores, and all kinds of things to increase your capacity.
• Considerations: Potential latency issues, reliance on the cloud provider's security, and potential data privacy concerns. Another major consideration is cost. Cloud systems require a monthly fee based on your usage. Each provider is a little different. But depending on how many users you have, how much bandwidth you use, and how much virtual hardware is in use – the cost for cloud-based infrastructure can increase, sometimes outweighing the benefit. Cloud-based infrastructure will tie you to the vendor for the foreseeable future, changing cloud providers could prove to be challenging and require additional resources. Part of your initial cost might also include resources to help with the migration from on-prem to the cloud.  

On-Premise Infrastructure

• Location: Data and applications are stored and accessed on servers located on your business premises. If you have multiple offices, then VPNs would need to be built to support remote offices or remote workers to use the system as if they were in the office itself.
• Benefits: Greater control over data, physical security, and potentially lower costs in the long term.
• Considerations: Higher upfront costs, ongoing maintenance, and limitations in scalability (to scale, it would require hardware replacement or additions which could result in downtime).

Choosing the Right Option

The best choice for your business depends on various factors, including:

• Budget: On-cloud can be more cost-effective initially, while on-premise might be cheaper in the long run. In addition, there is a consideration for trading capital expenditures versus operating expenditures and how that might impact your corporate finances.
• Scalability: On-cloud offers greater flexibility to scale up or down as needed.
• Security: Both options have their security considerations. Evaluate the specific requirements of your industry.
• Compliance: Consider any industry-specific regulations that might influence your choice. Most cloud or SaaS providers should be able to provide you with information regarding their compliance stance.
• Technical expertise: On-premise infrastructure requires more in-house or an MSP for technical management.

Conclusion

By carefully weighing these factors, you can determine whether on-cloud or on-premise infrastructure is the best fit for your small business's needs and goals.