24Jul 2023

Cloud Computing vs. On-Premise Solution: Which Is Better for Your Business?

Because of the widespread acceptance of cloud computing, many companies have shifted their emphasis from on-premise systems to cloud delivery systems, raising the question, “Which software is better for my business?”

On-premise software is a more conventional IT infrastructure solution in which physical hardware, software, and data are kept on-site. Cloud computing is a newer approach that makes data storage and applications readily available via the internet as well as available for distant work.

According to Gartner, Inc., worldwide end-user expenditure on public cloud services is expected to increase 20.7% to $591.8 billion in 2023, up from $490.3 billion in 2022. This is more than the 18.8% increase predicted for 2022.

But does this shift in the wind means that cloud computing is clearly superior to on-premise computing? This article will elaborate on all you need to know about on-premise versus cloud solutions.

What Is On-Premise?

Cloud Computing vs. On-Premise Solution
Cloud Computing vs. On-Premise Solution – Image Source: Versify Solutions

On-premise refers to the IT infrastructure and applications that are installed and hosted on-site at a company’s physical location.

It refers to the installation of software on hardware that belongs to an organization and is situated there, often in the data center that belongs to the business. On-premises or on-prem are other terms for on-premise.

Since IT personnel can directly access the data with on-premise, the personnel have greater control over the setup, security, and administration of the server hardware as well as the data. 

This indicates that data and critical information are accessible to your internal teams and are not remotely accessible to other parties.

If your company needs hardware or systems that can be tailored to suit your needs, on-premise solutions are suitable.

On-premise solutions have less room for expansion; however, with on-premise, there is less opportunity for wasting time since you do not need a connection or internet access to obtain the necessary software.

The mere fact that a business uses conventional on-premise IT solutions doesn’t imply that it has done away with the requirement for safe, dependable remote access software.

On-premise just describes the location of the network activity’s hosting, not necessarily the location of the activity itself. In other words, a company using on-premise servers may nevertheless benefit from remote access’ greater flexibility and effectiveness.

Examining some of the benefits of on-premises vs cloud-based software solutions, let’s see what they are.

Advantages of On-Premise Solution

As you would expect, there are both advantages and disadvantages to using the on-premise solution. 

On-premises storage, in contrast to cloud storage, depends on equipment at your company’s physical location to handle your data. The entire technology will be your asset, and you’ll be in charge of lifetime management.

Let’s start by examining some of the advantages.

1. Absolute Control 

With on-premise, you have complete control over the data, hardware systems, and software. You can even closely observe the maintenance procedures.

Some businesses like having on-site, dedicated servers that can meet all of their requirements. A cloud storage provider may update their storage plan or add new features without having to request it; instead, they can do it themselves. 

Potentially, the ability to change the hardware of the server might allow sophisticated firms more customization and flexibility for their storage requirements.

You also get to decide which improvements to make. You are in charge of setting up, modifying, and updating the system using this solution.

2. Operate Without the Internet

The fact that users may access data without an internet connection is one of the main benefits of on-premises storage.

Despite the fact that the majority of organizations depend on the internet for doing business, a possibility of concern is always there as a lost connection might reduce output making it hard to access essential information.

Thanks to on-premises servers, you will have access to an internal network at any time, regardless of your broadband connection.

3. Ensures More Security

On-premises storage could be the best choice for businesses that deal with sensitive data, such as those in the financial sector. 

This guarantees there won’t be a data breach, which impacts millions of users every year. 

In 2021 alone, data breaches impacted 212.4 million Americans (compared to 174.4 million in 2020). Iran came in second with 156.1 million users surpassed in 2021. (up from 1.4 million in 2020).

Data Breach Statistics
Data Breach Statistics – Image Source: Surfshark

Data Breach Statistics – Image Source: Surfshark

On-premises storage is totally hidden from anybody but authorized workers, unlike cloud storage, which is more open to outsiders and nosy eyes. Since on-premises storage are not keeping the data online, their servers are not accessible from outside of that network.

Disadvantages of On-Premise Solution

On-site storage has numerous benefits, as previously discussed; however, there are also certain disadvantages that businesses need to be aware of. Off-site storage may not be the ideal option since it:

1. Needs Further IT Support

You’ll need IT professionals if you opt to utilize an on-premises solution so they can manage and maintain the servers. 

This might require you to employ more workers or for your existing team to spend more time maintaining the servers. 

As a result of the increased workload placed on your IT department due to the on-premises servers, this additional assistance might raise your expenses and decrease its effectiveness.

2. Increased Expenditures for Maintenance

You’ll need to keep investing in hardware, software, and licensing to update or repair the system on top of the original capital needed to acquire servers and other infrastructure. 

A hardware component will often break down and will have to be replaced. In order to get the most out of your server investment, you’ll also need to upgrade your hardware, which will probably need to be done at least once a year and cost big bucks.

3. Need a Bigger Upfront Investment

When you initially set up an on-premise system, you’ll need to put a significant sum of money aside to buy the servers and other necessary pieces of technology. 

You’ll need to invest time and money into making sure the technology is installed correctly in addition to buying it. 

This degree of capital investment might be a significant disadvantage for businesses that are just starting out.

4. Limit the Growth Potential of Your Business

Expanding your on-premises server is harder if your business grows and requires additional storage or other capabilities. 

In contrast to cloud storage, where businesses may choose a larger plan with only a click, on-premises storage necessitates the installation of additional hardware and the expenditure of labor to create the new systems.

What Is Cloud Computing?

Cloud Computing Architecture
Cloud Computing Architecture – Image Source: Spiceworks

The term “cloud” denotes the software, servers, and services that operate through the internet as opposed to locally on the organization’s computers and infrastructure. 

Remote servers are used in cloud computing for data storage, networking, email, and networking. Data is managed, processed, and encrypted by a 3rd parties operator. 

Real-time monitoring and insights are offered by cloud operators. Cloud computing allows startups access to the banking industry due to its limitless computation and storage capacity. 

Depending on the market and client demands, businesses might scale up or down. Safe online purchases and transactions are made possible by digital wallets and merchant accounts.

Virtualization, which enables the creation of virtual computers, is one of the core technologies underpinning cloud computing. 

One virtual server becomes many servers when several server machines are running at once, and several data centers are also produced as a result. This enables cloud service companies to provide decent services to several organizations simultaneously.

Google Drive, Dropbox, and OneDrive are a few examples of cloud services for users. 

Advantages of Cloud Computing

The advantages of cloud computing over on-premise are one of the key factors driving individuals to switch. Some of the top benefits include the following:

1. Cost-Effective

The affordability of cloud computing systems is a big benefit. There are no up-front expenses while using the cloud. You consistently pay; thus, it counts as an operational expenditure (OpEx).

Businesses should not be concerned about maintenance and upgrade expenses when using cloud computing systems; they should only be concerned about the subscription cycle. These monthly expenses often come in the form of subscription fees.

By employing cloud computing, a company may avoid the trouble of maintaining the physical infrastructure, which might break down and result in data loss or theft. The company saves thousands of dollars as a result.

2. Accessibility Anywhere and at Any Time

You may simply and hassle-free access software, data, and services via the internet using cloud computing systems. You may access the apps you want whenever you want on any device. Your staff members may join from anywhere using any computer, smartphone, or tablet. 

As a result, your businesses may take advantage of the opportunity to adopt laws like the Bring Your Own Device (BYOD).

And since users can readily access the cloud storage and exchange information among themselves, this accessibility also helps increase cooperation between groups of workers, boosting performance.

3. Easy Installation 

Cloud computing is simple to implement and can be set up in a matter of hours, compared to on-premise systems that need considerable installation time. 

A skilled service provider can quickly install cloud computing solutions on your servers, saving your company a ton of time. Customers of cloud software providers will soon be allowed to use the vendors’ applications. 

Quick deployment is particularly popular among competitive businesses since it provides organizations with an advantage over their competitors.

4. Management Services

The management services that vendors often provide customers are another factor that should pique your interest in cloud-based software

Working with a provider that will handle everything outside allows a client to avoid having to host the software or buy the hardware themselves, freeing up workers and lowering expenses. 

The provider will take care of all management, so the company won’t ever have to bother about updates or network monitoring.

Disadvantages of Cloud Computing

As you can see, cloud computing offers a number of advantages. There are a few drawbacks, however, that you should be aware of before employing the system, such as:

1. Security Issues

Cloud software also suffers from security challenges similar to those that afflict cloud storage. 

Cloud Security Challenges
Cloud Security Challenges – Image Source: TechTarget

Despite improvements in security, the cloud may still be breached by outside parties looking to steal data from some of these online services. 

In fact, 45% of firms, up 5% from the prior year, have had a cloud-based data breach or failed audit, which has increased worries about safeguarding sensitive data from hackers.

Look for vendors that enable an authentication method (a multi-factor authentication) if you decide to use the cloud. A common business directory server should be used to control staff access through onboarding and offboarding procedures.

2. Long Term Expenses

Another problem with cloud-based software is that, over time, subscription fees may wind up costing more overall than if a business had paid a license price upfront. 

This is particularly true if your company does not use the most recent software release. The most recent iteration of cloud-based software is sent to the customer, and the monthly subscription includes the development expenses.

3. The Need for a Reliable Internet Connection

In contrast to on-premise, companies will not be able to access the information for cloud application modernization if the internet connections were to go down. 

You must make sure that you use a faultless internet connection or service with high speed since its complete performance relies on the broadband connection you are using, making it difficult to retrieve your information when the internet is extremely slow.

  1. Less Adaptability

For businesses that employ cloud-based software, adaptability is invariably a problem. Software providers that provide their services to businesses in the cloud sometimes don’t offer many customization alternatives. 

They offer the same off-the-shelf application to all customers. Consumers may not obtain a service that is handy for all they do since the service is often created for the industry instead of meeting the unique demands of a firm.

Which Is Better for Your Business?

Cloud Computing vs. On-Premise Solution
Cloud Computing vs. On-Premise Solution – Image Source: VIDIZMO

Due to its adaptability, dependability, and security, the cloud has been called superior to on-premise since it frees you from the headache of maintaining and upgrading systems and lets you focus your time, money, and resources on executing your essential business strategy.

On-promise, on the other hand, also has advantages that are certain to add value to your company.

The question of whether to use cloud or on-premise software has no right or wrong answer. The main differences between the two services are listed below.

1. Cost

When comparing the costs of on-premise systems with cloud computing, we find that the initial capital expenditure for an on-premise system may be fairly significant and can attract huge amounts of money.

The cost of cloud computing, on the other hand, is much lower and requires a membership. By using cloud computing, companies may instantly access the necessary software services and upload their material to a private or publicly accessible data storage system.

Physical space, significant financial outlays, and technological knowledge are not required.

2. Deployment and Maintenance

An on-premise system is more expensive to implement because of the administration of the physical infrastructure, regular plan updates, and the need for IT employees to maintain the system operating effectively.

Continuous maintenance is necessary for on-premise systems. However, cloud computing services eliminate this need.

Since cloud software does not need database hardware or physical server and can be deployed in a couple of hours, it is significantly simpler to install than on-premise software.

3. Security

However, many businesses trust an on-premise system when comparing cloud security to on-premise security.

An on-premise solution delivers a high degree of security since data is stored on the company’s own servers. In contrast, employing a public cloud environment might raise security issues due to hacking and cloud breach incidents.

Protection won’t be a problem, however, if you choose a reputable cloud service provider with a high degree of security.

4. Level of Control

In addition, the business has complete control over its on-premises resources, operations, and information, including who has entry to it and whatever happens to it.

But at the other hand, in a public cloud setting, data is stored on servers owned by other people. You may not be able to access the information if an unanticipated problem arises until the cloud service provider fixes the problem, so to speak.


The best course of action is to perform a cost-benefit analysis before choosing an IT infrastructure.

Various sectors may flourish thanks to cloud computing because of the constant introduction of new technologies. What you can do with your company has no bounds. 

Think about all your possibilities, both on-premises and in the cloud, and consider the advantages and disadvantages of each.

When attempting to determine which kind of system is ideal for your company, you may consider the following questions:

  • Do you have the necessary infrastructure to support solutions that are installed locally?
  • If not, is the initial investment necessary to create such infrastructure worthwhile?
  • Do you require complicated configuration, security, or regulatory requirements for our business?
  • Would you choose to assume complete responsibility for your infrastructure? Or would we feel at ease outsourcing our hardware requirements to IT companies with a focus on remote access?

If you limit your company to only one platform, you might suffer expensive consequences. By doing a thorough study, you can make sure that your company receives the greatest outcomes.

Acodez is a leading web development company in India offering all kinds of web design and development solutions at affordable prices. We are also an SEO and digital marketing agency offering inbound marketing solutions to take your business to the next level. For further information, please contact us today.

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Rithesh Raghavan

Rithesh Raghavan

Rithesh Raghavan, Co-Founder, and Director at Acodez IT Solutions, who has a rich experience of 16+ years in IT & Digital Marketing. Between his busy schedule, whenever he finds the time he writes up his thoughts on the latest trends and developments in the world of IT and software development. All thanks to his master brain behind the gleaming success of Acodez.

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