Cloud vs on-premises: read this article to learn which deployment model is suitable for your business.
Research shows that most US companies go cloud-first when choosing where to deploy a new application. Indeed, cloud computing brought many new amazing solutions to people’s lives. But… Is it the only way? In 2024, are on-premises solutions a viable option for companies?
Spoiler: Absolutely! It provides security benefits, streamlines regulatory compliance in certain industries, and can be more cost-effective than the cloud. But you need to dig into the matter a bit to understand whether these benefits will really play out for your business model and IT needs.
In this article, we’re discussing the advantages and disadvantages of cloud vs. on-premises solutions.
When discussing enterprise software, the terms cloud and on-premises describe different software deployment models, indicating where and how the software is hosted and accessed.
In the cloud deployment model, the vendor hosts and delivers software applications and services to the client over the internet. In the on-premises deployment model, software applications run on computers and servers within the organization’s physical premises.
We’re providing detailed definitions of these terms and breaking down the various types of cloud deployment models in the FAQ section below.
Traditionally, software applications were installed and operated on local computers and servers within an organization’s physical premises. This practice was not limited to corporate environments. Remember you had to download your favorite desktop game, or an antivirus, to start using it? And you definitely can recall those desktop notifications reminding you to upgrade the software to the newest version.
At that time, we had most of the software on our premises: organizations had it in their basements, and people had it on their personal computers.
However, further technological developments, including the widespread adoption of virtualization, enabled the breakthrough of cloud computing. Now that cloud solutions have entered the market, organizations could forget the burden of handling the IT infrastructure. Another great advantage of cloud software is that you can scale resources flexibly based on demand.
Virtualization in cloud computing is creating a virtual version of a computer or server. It allows you to run multiple operating systems or applications on a single physical machine. Instead of having one server for each task, virtualization lets you use the same server for various purposes simultaneously.
These benefits allowed for the broad adoption of cloud solutions in recent decades. In 2022, based on research published by Enterprise Strategy Group, 47% of organizations implemented a cloud-first policy when deploying new applications. Moreover, 41% of on-premises applications were strong candidates to move to public cloud services in the next five years. This evidence suggests the trend toward a fully-cloud future.
Still, the same research shows that 26% of organizations go on-premises-first when deploying new applications, which is not insignificant. Both cloud and on-premises solutions are viable options, with the cloud emerging as the more widely embraced choice. This article will explore why a company would deploy on-premises software instead of a cloud option and vice versa.
What are the advantages and disadvantages of each type of software deployment? And, finally, which option is best in your case?
The statistics on cloud adoption prove that cloud solutions are more prevalent when deploying new applications.
Indeed, cloud deployment provides several benefits:
In the cloud or on-premises? The choice is yours. Our award-winning ITSM software can be deployed on-premises on your servers, delivered as SaaS by Alloy Software, or installed on your Azure or AWS cloud. Connect to our sales team to learn more!
And if you want to compare our solution to what other vendors offer, read our article on the best ITSM tools in 2024.
Meanwhile, cloud versions of enterprise software might be less than ideal for several reasons:
HFT strategies exploit minimal price differentials that exist for very brief periods. A steady internet connection helps minimize latency, which is the delay between the initiation of a trade and its execution. Lower latency enables traders to capitalize on fleeting market opportunities. That is why, if such businesses are using cloud solutions for transactions, they should be aware of their dependency on the internet connection.
As noted, about 26% of companies still prioritize on-premises solutions. Here are the advantages of on-premises solutions that might make them do so:
In companies working with personal data, such as banking, access to sensitive databases is often restricted to the corporate office environments. In this case, accessing personal data from home, over the cloud presents higher security risks.
Furthermore, on-premises deployments provide the flexibility to implement and directly control physical security measures, such as access controls and surveillance systems.
The above-mentioned characteristics of on-premises deployments may, however, in many cases, turn into disadvantages:
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In 2023, the evolution of software solutions has reached a level where any business process can be outsourced, from server maintenance to workflow management and documentation management. However, the more complex solutions become, the harder it becomes to choose the most suitable option to avoid future migrations and excess spending. Whether an application is hosted in the cloud or on-premises can significantly influence its performance and is an important characteristic. We advise you to factor in the following considerations when choosing between the two models:
While currently, there is a software solution for almost any business task, there are still no silver bullets to purchasing challenges.
On one hand, cloud software is cheaper and easier to handle, but it may come with a complex pricing structure. Additionally, popular cloud service providers tend to raise prices when they see higher demand, and then it’s suddenly not as cheap anymore.
On the other hand, on-premises deployments require substantial upfront spending and are anything but flexible. What’s certain is that you need to consider several factors and spend some time evaluating opportunities before investing in software or hardware.
