The pros and cons of on-premise vs moving to the cloud [Guest post]

Posted by Mike Swift on 06 Mar 2019 11:01:00 AM

As the debate between cloud and on-premise continues, find out why cloud is increasingly becoming the choice over on-premise and what you need to know to make an informed decision between the two.

In an ever-increasing digital world, the value of being connected is becoming more apparent to decision makers across various industries. Companies are looking for ways to meet their business goals by utilising these developments in a cost-effective way. Cloud and on-premise both offer viable solutions yet have distinct advantages and disadvantages that need to be carefully evaluated.

In South Africa, 83% of companies surveyed in the Cloud Africa 2018 report, planned to further increase spending on the cloud, which is a 9% increase from the previous year. And according to the SA Tech Adoption Report, small businesses that use cloud technology have not only saved more than 10 hours a week, but over half have also saved money.

Despite these benefits and shifting attitudes, there are still companies that continue to rely solely on on-premise technology such as medical, real-time, end of life/heritage, or legacy. It depends on what need is being solved and some solutions lend themselves better to cloud-based scenarios than others.

Cloud vs on-premise

Why is the debate between cloud and on-premise so topical? And why is cloud becoming increasingly favoured over on-premise? To understand this, it is important to look at the variables below.

1. Setup and implementation  

Cloud can be set up quickly and allows customisation and accessibility provided there are no internet connectivity issues, while on-premise requires infrastructure and a bespoke plan which takes time.

2. Cost

This is a big one for any business and when it comes down to it, and there are three types of costs that are important to consider when navigating cost vs the benefits:

  •       Hard Costs (real money)
  •       Soft Costs (your people and market perception)
  •       Opportunity Costs (your success or failure)

On-premise requires significant upfront and ongoing hard costs like hardware, electricity, cooling facilities, building space, and replacement of equipment. In addition, these capital costs will depreciate over time. Soft costs for on-premise can be equally high because it requires license fees and specialist skills attraction and retention.

In terms of opportunity costs, some ascribe to the “If it isn’t broken, don’t fix it” rule or have created an on-premise technological dependency that makes it very difficult to modernise, become agile, and achieve digital nirvana. The problem with this is, the longer they hold out, the more difficult and expensive it becomes to finally move to the cloud.

Whereas with the cloud, hard costs are kept to a minimum (unless new hardware devices are required), as most of the costs are operational and are therefore soft costs. Where the cloud shines is with opportunity costs, because if your industry is dependent on first-mover advantage it can benefit from speed to market or new capabilities, the benefit far outweighs any other decision.

3. Scalability, flexibility, and customisation

Perhaps one of the best features of the cloud is that companies only pay for what they use and can easily scale up or down to suit business demands. The availability of third-party apps allows for easy customisation. The cloud enables remote access which can have a positive effect on workflow provided the user has access to a fast and reliable internet connection.

With on-premise, it is difficult to scale as it requires a specialised plan that involves capital costs. There is also the possibility that by the time the plan has been deployed, the business demands have changed, which could result in a loss. However, in terms of customisation, on-premise can be tailored to your exact requirements.

4. Management, maintenance, and security

With the cloud, all management, maintenance, and security sit with the provider, which can be both a blessing and a curse. For one, the provider will handle upgrades, troubleshooting, helplines, and training, and is responsible for the safety and security of the data. This allows you to focus on other aspects of running your business without having to invest time or resources into ensuring the cloud runs smoothly. However, and this doesn’t happen often as cloud providers can experience a data breach.

On-premise requires that all of this be handled by the company and if this isn’t your main area of expertise, can be costly. On the other hand, complete control means that as a business you get to decide how this should be run and can use your in-house IT team to do so.

5. Compliance 

On-premise usually beats cloud where compliance factors need to be considered and where storage or operations can’t only rely on internet connectivity. Sensitive information, for example, needs to be secure which requires that access is controlled and that there are clear security breach protocols in place.

But this doesn’t mean that the cloud can’t be used in cases like this. It just means that it is essential that companies do their own due diligence to ensure that compliance regulations are met.

  Cloud On-premise
Set up and implementation Fast, could provide a first-mover advantage and no capital costs Requires planning as well as infrastructure costs
Scalability, flexibility, and customisation Easily scalable up or down to suit business demands. The availability of third-party apps, the ability to work remotely but relies on an internet connection More difficult to scale as it requires a specialised plan, as well as a capital loss if scaled down. More customisation opportunities may be expensive and need to be maintained
Management, maintenance, and Security Handled by the cloud provider which specialises in these fields The company has complete control of the platform and is therefore responsible for all of this
Compliance Due diligence required to ensure it meets industry standards Tailored to suit the company’s compliance needs

There are however myths that still persist about moving to the cloud. Read our blog - Busting the myths: The truth about moving to the cloud to find out more.

Which solution is best for your company?

Cloud and digital transformation is not about applying new technology to old problems, it’s about applying new and evolved technologies to create and foster innovation to find inclusive, faster, simpler, and more cost-effective solutions.

As cloud computing becomes mainstream, the challenges have shifted from latency, data regulation and cost towards choosing a partner, finding the necessary skills, governance and policy, and perhaps most critical, which workload to prioritise next as a company continues its journey of digital transformation.

More and more, issues of trust, transparency, and partnership are coming to the fore which speaks directly to company ethics, culture, and the ability to work as a team in order to get things done. These issues have become critical success factors for IT and Business, or any industry, running on the cloud.

It would be very hard to not recommend cloud to anyone, as the ecosystems of innovation and capability are exploding globally. Increasingly, technology solutions sit in virtual bubbles that run in virtual allocations on finite hardware which lend themselves more favourably to consolidation, modernisation or replacement.

As both organisations and individuals are simultaneously going on a journey of personal and organisational digitisation there still remains a need for both, and therefore the true answer currently lies in the realm of Hybrid IT. This offers the best of both worlds, or at least until we find a cloud-based application for that service in a particular industry.

If you think you are ready to move to the cloud, take our Technology Audit and find out if your organisation is ready to make the move.

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