On-Premises vs Cloud: Which is Better?

Posted on by David Singer | Updated:
Reading Time: 7 minutes

Private hosting services usually fall under two primary types:

  • Externally hosted cloud solutions.
  • Internally hosted or on-premises hardware solutions where you manage your hardware locally.

The primary differences between the two are:

  • Overall Cost (TCO).
  • Level of support required.
  • Available scaling features.

When researching a hosting solution, small to medium-sized businesses (SMBs) inevitably face two choices: on-premises vs cloud hosting. And, with all the options available, most IT managers are left feeling like they don’t know where to turn.

Private Cloud Hosting solutions and on-premises hosting solutions have their advantages and disadvantages. This article outlines the pros and cons of each option to help you make the best choice for your organization.

What Does On-Premises Hosting Mean?

On-premises hosting is precisely what the name implies. Companies choose to physically locate their hosting platform on company property. When comparing on-premises to cloud, this is one of the most noticeable differences.

Of course, you’re dealing with an entirely different animal when you opt for on-premises vs private cloud hosting. Naturally, this decision comes with its own set of advantages and disadvantages.

Advantages of On-Premises Hosting

Here is a quick rundown of some of the pros of on-premises hosting.

1. Independence From Internet Providers

Cloud hosting relies solely on your Internet connection, but on-premises hosting does the opposite. By locating your hosting platform on-site, you can hardwire your network. As a result, you no longer have to worry about a loss of connection affecting your team’s productivity.

You’ll be able to access your on-premises network at any time, regardless of your Internet connection. In addition, you don’t have to worry about a connection interruption wiping out any crucial files.

2. Save on Internet Costs

Operating your hosting server on a hardwired, on-premises platform means you may not need a high-speed Internet connection. Since Internet providers usually charge more for higher connectivity speeds, your team may save money on monthly Internet expenses.

3. Higher Level of Security

Having an on-premises hosting platform means that only authorized personnel will have access. It’s also much more difficult for hackers to penetrate a network located on-site instead of one hosted on the cloud. 

Companies in the financial or healthcare space also benefit from an on-premises solution. This solution further shields their sensitive company, customer, and patient data from cybersecurity vulnerabilities.

Disadvantages of On-Premises Hosting

Let’s take a look at some of the drawbacks of operating your hosting from an on-premises platform.

1. Your Growth May Be Limited

When dealing with cloud hosting, you can quickly expand your system’s capacity to meet your needs. However, on-premises hosting is different in that regard.

The physical server framework you’ve set up on-site will have limited capacity. As a result, you’ll need to invest in more servers and buy more hardware to accommodate your growth, which comes at a substantial cost. 

If you’ve outgrown your current server room, you may also need to purchase more real estate. Solving where to store additional equipment may be challenging.

2. Having to Manage a Dedicated Server

Internal private cloud servers come with another setback. Companies that choose this option shoulder the responsibility of operating a dedicated server. This undertaking increases a company’s liability regarding server costs and maintenance.

As an IT manager, you must weigh this downside against the increased control an on-premises solution will give you. Understanding what server functions are necessary to your daily operations will significantly help this process.

Additionally, the successful operation of your server requires hiring a qualified system administrator to maintain and monitor the systems. Organizations already staffed with admins may not view this as a concern, but it can be a tough hurdle to overcome for smaller operations. Furthermore, hiring a skilled professional will only add to the already-hefty price tag of operating an on-premises server.

3. Increases Human Error

One of the greatest enemies of IT infrastructure is human error. There is no doubt that all IT teams are great, but mistakes still happen. When handling large amounts of sensitive data, simple errors can be costly.

Using an on-premises hosting platform requires your team to install updates and create backups manually. If someone forgets a scheduled update or backup, it could severely impact your business due to one of many common cyber attacks.

What is Private Cloud?

A private cloud is a virtualized, isolated, and secure hosting solution comprised of resources pooled from multiple servers hosted internally or in a data center. 

Internal private clouds provide an internal solution to an organization’s hosting needs. In addition, an on-premises private cloud gets controlled entirely in-house, providing businesses with more flexibility.

The most popular environment is off-site with a hosting provider. Because of pooled resources, you can configure your cloud computing in various ways to find the framework that best fits your business. This model also gives IT teams superior control over their hosting platform.

Advantages of Private Cloud

When comparing private cloud vs on-premises, there are several advantages to going with the cloud option.

1. Budget-Friendly

A private cloud solution is an excellent option for new SMBs, as running a dedicated server environment in-house requires a significant financial investment. The necessary hardware and software can set companies back a pretty penny if they choose to locate their hosting platform on-premises. Private cloud solutions allow you to avoid that issue. You’ll also be able to pay for your cloud on a monthly subscription basis. 

2. Flexibility

Companies that choose a private cloud have the advantage of a more flexible hosting solution. These companies can adjust their monthly costs to fit a wide range of budgets. As an IT manager, you can also negotiate with your provider to add or remove certain features depending on their implementation.

Not only does this aspect help you fit your cloud hosting into your budget, but it also helps you to tailor your hosting to accommodate your team throughout every stage of growth.

3. Keep Data Secure

Private cloud solutions also help you keep your data secure. Regularly scheduled backup protocols are one of the significant advantages of these systems.

On-premises solutions leave IT teams at the mercy of the on-site computers. Critical data security is compromised if files get deleted or one of the computers has a meltdown.

A cloud solution avoids all of that as clients have peace of mind backing up their data on the cloud. They know if anything goes wrong with the hardware in their office, their essential files and data will still be there. This feature is vital in every industry, but it’s even more necessary in industries where compliance with data security laws is essential.

Disadvantages of Private Cloud

While a private cloud solution offers many benefits, businesses must contend with some drawbacks. Ultimately, it will be up to you to weigh the pros and cons of on-premises vs cloud to see which solution best meets your needs.

1. Your Internet Connection Is King

Your experience using a private cloud on-premises will ultimately depend on your Internet connection. If your team’s Internet speed is below average, downloading vital data can become a chore. Therefore, doing whatever you can to ensure an uninterrupted, high-speed Internet connection is paramount to the success of your cloud solution.

If your cloud hosting is the backbone of your IT framework, you may want to consider a redundant Internet connection. A backup connection to your hosting platform will ensure the type of internet connectivity you need, even if your cloud framework will handle most of your IT workload.

2. Variable Costs

When it comes to your hosting platform, there is no doubt that scalability is your friend. Naturally, you want to choose a solution that can grow along with your business. But, if that scalability is left unmanaged, it can become just as much a detriment as it is an asset.

The same monthly subscription model and flexibility that can help you can also hurt you. Most data companies operate on a consumption model. Essentially, the more you use, the more you pay. This model applies to your hosting and features offered by your provider.

If the storage and features you’re using are left unchecked, you could wind up with a surprisingly high bill. You and your team should work out policies and procedures to keep an eye on this expense and avoid being blind-sided by expensive invoices.

There are a lot of industries where data compliance is an integral part of the job. So if there’s any legal issue with the management of that data, it may result in a legal investigation.

During this investigation, having essential company documents on a cloud server may put you at a disadvantage. These documents aren’t likely to help law enforcement much. And, if they’re deleted or mismanaged while officials comb through your server, it could cause problems for the operation of your company some time in the future.

A Hosted Private Cloud

A hosted private cloud solution is owned and operated by a third-party service provider like Liquid Web. This hosting platform bridges the difference between on-premises and private cloud solutions since you’re leveraging a third-party company with a much larger server infrastructure. This capacity allows the hosted clients to serve a much broader clientele since they benefit from the economy of scale. 

Another considerable advantage of a hosted private cloud solution is more resources. It comes as a natural byproduct of working with a company equipped with a much larger data framework. The result is on-demand scalability options for end-users.

SMBs in specific industries need to consider their data options more carefully than others. Specific industries handle high-risk data daily, and compliance with government regulations becomes their primary concern. Industries requiring PCI or HIPAA solutions can benefit from the increased security of a hosted cloud platform.

In the case of on-premises hosting, organizations may have to expand security and control practices. However, choosing a cloud platform hosted by a third party makes these access and security concerns a thing of the past.

Last and certainly not least, businesses gain a considerable benefit from the support and management inherent in a hosted cloud solution. The necessary hardware and staff make maintaining an on-premises solution a significant financial and workforce resources investment. Companies should leverage the power and professionalism of a third-party provider when given a chance.

Which is Better for Your Business?

Ultimately, every organization will have to factor in the pros and cons for themselves when comparing on-premises vs cloud. There is no one-size-fits-all hosting solution since every organization has different needs.

We know that private cloud solutions of all types provide greater control and security. But, not every organization can afford to launch, support, and maintain a private cloud on-premises. That’s where hosted cloud solutions like Liquid Web’s VMware Private Cloud come in. Contact the Liquid Web sales team for more information.

Avatar for David Singer

About the Author: David Singer

I am a g33k, Linux blogger, developer, student, and former Tech Writer for Liquidweb.com. My passion for all things tech drives my hunt for all the coolz. I often need a vacation after I get back from vacation....

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