Home » On Premise vs. Cloud: Key Considerations for Your IT Infrastructure

On Premise vs. Cloud: Key Considerations for Your IT Infrastructure

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Information technology infrastructure has undergone rapid transformation over the past few decades, leading to key considerations for On Premise vs. Cloud decisions. In the early days of computing, organizations typically owned and managed all their IT resources on-premises. Servers, storage, networking equipment and software were all hosted at a company’s physical locations. While this provided full control, it also meant significant capital and operational expenses for hardware, facilities, maintenance and in-house IT staff.

As cloud computing emerged in the 2000s, the possibilities for how IT infrastructure could be provisioned and managed began to shift. With cloud services, resources like servers, storage, databases and applications are hosted by third-party providers and accessed by organizations over the internet. The benefits of cloud include lower upfront costs, flexibility to scale, and the ability to convert CAPEX spending to more predictable OPEX.

According to Gartner, public cloud spending surpassed $300 billion in 2020, indicating it is now mainstream. However, Gartner also estimates that 80% of enterprises will still be using on-premise data centers in some capacity through 2025. This highlights how the cloud vs on-premise decision has become a complex question for modern IT teams, especially for businesses seeking IT support in New York City and around the globe.

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The Cloud vs On-Premise Choice

As companies digitally transform, the choice between cloud and on-premise infrastructure has critical implications for operations, budgets and strategic agility. Moving systems to the cloud can provide benefits around flexibility, scalability and costs. But some workloads may still require physical proximity, local control, or have compliance considerations that necessitate on-premise infrastructure. Furthermore, many enterprises use hybrid cloud models, looking to find the right balance between cloud and legacy on-prem.

With cloud now central to IT strategies, the decision of which applications and workloads belong where requires careful evaluation of factors around performance, security, costs and more. Getting this infrastructure foundation right is key as businesses build out capabilities in advanced technologies from analytics to AI. IT leaders must become informed advisors on the nuances between cloud and on-prem in order to most effectively harness infrastructure to drive digital initiatives and business goals.

On-Premise Infrastructure

On-premise infrastructure refers to IT resources that are owned and operated by an organization at their physical facilities. Typical on-premise components include:

  • Servers – The physical compute servers, racks and data center space. Organizations handle server installation, maintenance and upgrades.
  • Storage – Storage area networks (SANs), network-attached storage (NAS), and backup systems located on-site. Provides ownership over data security and sovereignty.
  • Networking – LANs, WANs, routers, switches, firewalls. Gives full control over network architecture and performance.
  • Software – Applications and software that is purchased, installed and run on the company’s hardware. Allows for full customization and local integration.
  • IT Personnel – In-house IT staff to manage infrastructure, from sysadmins to data center technicians. Enables expertise with proprietary systems.

On-premise infrastructure provides organizations with full ownership and control. However, it requires significant capital investments and in-house expertise, and can be limited in scalability and agility.

Cloud Infrastructure

Cloud infrastructure refers to IT resources that are hosted and delivered over the internet by a third-party provider. Some key characteristics of cloud infrastructure:

  • Servers – Provided as part of cloud services like IaaS, PaaS, SaaS. Resources can scale on-demand to meet needs.
  • Storage – Cloud storage with nearly unlimited capacity that can expand as required. Enables global accessibility to data.
  • Networking – Cloud providers have massive global networks and handle connectivity and delivery.
  • Software – Apps and software offered via the cloud for flexible access. Reduces needs for local IT.
  • IT Personnel – Cloud providers manage the underlying infrastructure, reducing in-house staffing needs.

Cloud offers scalability, flexibility and potential cost savings. But organizations cede some control, security risks may emerge, and cloud costs can grow unchecked.

Hybrid Cloud

Hybrid cloud combines both on-premise and cloud infrastructure. This allows organizations to determine the right placement for different workloads based on factors like security, compliance, cost and performance. Some common hybrid models:

  • Keeping core legacy systems on-premise while shifting newer apps to the cloud
  • Having a private cloud on-premise that can connect with public cloud resources
  • Data centers for security-sensitive applications, and public cloud for general services
  • Backing up on-premise data and disaster recovery to the cloud

Hybrid provides the ability to take advantage of cloud benefits while maintaining control over critical systems and data. It also allows for interoperability between old and new. But it does require integration and orchestration between environments.

Cost Implications

Initial Investment

The initial investment required for on-premise infrastructure can be substantial. Organizations must budget for purchasing or leasing data center space, servers, networking equipment, storage systems, and software licenses. The large capital outlay comes with risks – overprovisioning can lead to wasted spend, while underprovisioning requires costly future upgrades.

In contrast, the cloud operates on a pay-as-you-go model without upfront investment. Cloud computing is treated as an operating expense rather than capital expense. Organizations pay for the cloud services and capacity used on a recurring basis, starting small and scaling up as needed. This provides agility and flexibility.

Maintenance Costs

On-premise infrastructure requires ongoing maintenance and operation costs. Server hardware and software must be continually updated, refreshed and patched. Data center facilities require energy, cooling and maintenance. IT staff teams have to be retained to manage upgrades, troubleshoot issues, and ensure systems are running optimally. These recurring costs continue through the lifecycle.

Cloud services tend to have lower maintenance overhead. The cloud provider is responsible for all hardware upgrades, redundancy, and resiliency. Patches, backups, and system monitoring are also handled by the provider. This shifts the burden of maintenance from the customer to the cloud vendor.

Scalability Costs

Expanding on-premise infrastructure can be challenging and require large capital outlays. Organizations may have to purchase new servers, upgrade storage area networks, lease additional real estate, and add bandwidth – all costly propositions. This makes seamless scalability difficult.

Meanwhile, cloud infrastructure is designed for elasticity and scalability on-demand. Cloud capacity can be provisioned through software, with no hardware procurement needed. This streamlined scalability converts Capex to Opex. Cloud services can then be scaled up or down to precisely match requirements.

Although cloud requires a continued operating expenditure, it limits major upfront capital costs, reduces ongoing maintenance burdens, and provides more efficient scalability – all key advantages over on-premise solutions from a cost perspective.


Flexibility and Scalability

On-Premise Limitations

Expanding on-premise infrastructure requires significant planning and capital investment. Physical servers and storage have finite capacity, so growth often means procuring new hardware. Adding server racks, storage arrays, network switches, and expanding data center space carries large upfront costs.

Lead times to procure and install new infrastructure can also limit agility. Supporting major new application demands or workloads may be slow and costly. While virtualization and converged architectures have helped, scaling physical assets has inherent constraints.

Cloud Advantages

In contrast, the cloud provides almost unlimited on-demand scalability. Cloud infrastructure is software-defined, virtualized, and distributed across large data centers. Capacity can be provisioned through APIs in minutes, without procuring hardware. Usage-based billing allows paying for additional resources only when needed.

If an application grows rapidly or spikes in traffic, cloud services can scale elastically to the workload. This gives organizations agility to respond faster to market dynamics and new initiatives. Cloud also enables rapid testing of concepts before committing major investments.

Hybrid Approach

A hybrid model allows organizations to harness scalability advantages of cloud for selected workloads, while keeping proprietary systems on-premise. On-premise infrastructure can handle predictable and stable workloads, while dynamic applications can leverage cloud scaling. Critical systems maintain security while new apps tap cloud agility.

Hybrid enables selectively tapping cloud scalability for things like cloud bursting, disaster recovery, archival storage, test environments, and more. Workloads stay aligned to the best location from scalability and compliance perspectives. Organizations avoid vendor lock-in.

Leveraging both environments allows on-premise to handle stable core workloads, while cloud provides scalability for innovation initiatives and new demands.

Performance and Reliability

Downtime Issues

On-premise infrastructure carries risks of downtime from local outages or failures. If the data center or part of the network goes down, applications and services are disrupted. While redundancy solutions like failover clusters help, major issues can still cause disruptions.

Cloud services offer higher resiliency and distribute resources across multiple data centers. If one cloud data center experiences problems, services can be shifted and redirected through sophisticated load balancing. This helps minimize downtime risks. However, reliance on the public internet introduces availability concerns if connections are disrupted.

Data Access Speed

On-premise infrastructure offers more control over performance optimization and can provide faster response times for localized applications. By avoiding the internet, network latency is reduced. For applications where nanosecond response times are critical, on-premise has advantages.

Cloud services involve remote access over the internet, which is subject to congestion and latency. While performance is often adequate, mission-critical apps with tight time sensitivities may benefit from an on-premise environment. CDNs and caching can help improve cloud response times.


While on-premise redundancy is possible, it is expensive to replicate physical infrastructure. Most organizations can only afford a primary and backup data center. Disasters that affect a whole region could overwhelm redundancy.

Cloud providers have vast networks of global data centers to enable geo-diversity. If one region is affected by disaster, traffic can be shifted across data centers. This redundancy makes cloud well suited for disaster recovery capabilities and business continuity.

While on-premise offers localized speed, cloud provides high redundancy to minimize downtime risks. Hybrid models can take advantage of both strengths.

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Security Concerns

On-Premise Control

On-premise infrastructure gives absolute control over data security and access. Physical perimeter security for facilities, servers, networks can be tailored to internal policies. Unique compliance needs around encryption, residency, and categorization can be implemented directly.

The responsibility of managing security across components from facilities to endpoints falls on internal IT teams. Gaps in expertise, system configurations, or processes can leave vulnerabilities. Limited budgets may also constrain security capabilities.

Cloud Security

Leading cloud providers implement state-of-the-art security, encrypting data and hardening infrastructure. However, sharing an environment with other tenants can heighten risks of targeted attacks to exploit shared resources, like side-channel CPU vulnerabilities. Customers cede control to the provider’s practices.


On-premise offers full control to meet industry and region-specific regulatory compliance like HIPAA, PCI DSS, or GDPR. But the burden of compliance processes and controls rests with the company. Meeting evolving compliance standards can be challenging.

Major cloud providers meet a wide array of compliance frameworks and undergo regular audits to verify security controls. This simplifies compliance for customers, who can inherit required controls. But verifying provider compliance is still necessary.

Although on-premise provides visibility and control, cloud offers economies of scale in security. Following the best practices in both environments is essential to manage risks.

Accessibility and Remote Work

On-Premise Restrictions

On-premise infrastructure is constrained to physical locations and local networks. Access is typically limited to company intranets or external VPN connections. Enabling secure remote access requires IT administration for permissions and tokens. This makes remote work dependent on VPNs and managed devices.

Cloud Freedom

A key advantage of cloud is enabling browser-based access from any device with an internet connection. This approach has become essential to support remote work and distributed teams. Workers can securely log in from home PCs, mobile devices, and shared workspaces.

With the cloud, organizations can more easily provision temporary access and collaboration capabilities, as needs arise. This was evident through the COVID-19 pandemic, as cloud-based tools supported remote initiatives. On-premise infrastructure lacked the same accessibility.

The cloud model inherently supports accessibility from anywhere. This facilitates productivity and collaboration across dispersed teams and locations. On-premise is more limiting to fixed workstations and offices unless remote access is explicitly enabled.

Cloud delivers visibility and freedom to securely work remotely. On-premise is reliant on VPNs and managed devices within physical networks. The cloud model better aligns to the evolving workplace and distributed teams. Learn more about how an MSP can deliver cloud services and facilitate your migration to the cloud.

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Management and Maintenance

Internal IT Teams

On-premise infrastructure relies heavily on internal IT teams to manage day-to-day operations. Skilled personnel are required for administration, monitoring, troubleshooting, upgrades, and more. As infrastructure expands, additional headcount is often needed to maintain performance.
Cloud Providers

A key benefit of the cloud is outsourcing management and maintenance to the provider. The customer offloads the burden while gaining 24/7 monitoring, expert support, and automatic updates. Cloud management interfaces simplify oversight without expanding IT headcount.

Hybrid Complexity

Hybrid environments can increase management complexity with infrastructure spanning both on-premise and cloud. This may require integrated management tools that provide visibility across assets, as well as processes to handle handoffs between teams.

If not properly coordinated, hybrid management can become convoluted. Clearly delineating responsibilities and workflows is essential. Automation and cloud-based management platforms help provide consistency across environments.

While on-premise needs dedicated IT staff, cloud enables outsourced management. But hybrid environments introduce integration challenges that must be addressed through coordination and unified oversight.

Long-Term Vision and Commitment

Changing Business Needs

On-premise infrastructure requires long-term planning aligned to projected capacity. Growth may necessitate new facilities, upgrades, and refresh cycles. Contraction may leave unused resources. Shifting gears rapidly can be difficult with physical assets and capital intensive upgrades.

Cloud provides more flexibility to evolve with needs. Capacity can be provisioned on-demand, making it easier to scale or downsize. Less long-term commitment is required, and changes can be implemented through software. Cloud enables adjusting to market dynamics and internal initiatives with agility.

Exit Strategies

Transitioning between on-premise platforms usually involves significant migration efforts. Hardware assets have to be replaced, and data/applications moved. Integrations into legacy systems create inertia. But organizations have full control over timelines and approach.

Exiting cloud services also requires data migration and re-platforming applications, which takes planning. But competitive pressures between providers incentivizes portability. Leading cloud providers make it easier to shift between environments and avoid vendor lock-in.

Overall, on-premise requires longer-term bets, while cloud offers more fluidity. Each path comes with its own transitional challenges. Aligning infrastructure to core systems, data sovereignty needs, and potential future changes is advisable. Planning for optionality ensures the ability to pivot as business evolves.

Cloud provides dynamic adaptability, but on-premise changes take more concerted efforts. Weighing these infrastructure considerations against long-term vision allows setting the right foundation for transformation. The ideal path aligns to strategic goals, data requirements, and ability to adjust to emerging needs.


How MSP’s Like Xperteks Empower Your Infrastructure Choices

As the options for designing modern IT infrastructure grow increasingly complex, partnering with a trusted Managed Service Provider (MSP) like Xperteks is key to navigating decisions. MSPs become an invaluable guide in evaluating, selecting, and implementing the infrastructure strategies that best align to your organization’s needs and goals through:

Expert Consultation

MSPs conduct in-depth assessments to understand your business requirements, dependencies, and pain points. With extensive knowledge across on-premise, cloud, and hybrid models, we provide unbiased recommendations tailored to your environment. Our architecture consultants become trusted advisors for infrastructure decisions.

Custom Solutions

We recognize that each organization has unique considerations based on industry, compliance needs, budgets, legacy systems, and strategic objectives. MSPs design customized roadmaps to optimize your infrastructure with the right placement of workloads across on-premise and cloud. The solutions we prescribe align infrastructure to power your most critical initiatives.

Seamless Transition

Our project management expertise streamlines transitioning to new infrastructure with minimal disruption. We help architect migrations, integrate cloud services, modernize applications, and implement hybrid management platforms. Through meticulous planning and flawless execution, we enable realizing the full benefits of your chosen destination.

At this pivotal juncture of cloud transformation, Xperteks delivers certainty in navigating the nuances between on-premise, cloud, and hybrid. Our goal is to empower you with the optimal infrastructure to drive competitive advantage. Let us guide you in building a technical foundation for the future.

Getting Started on Your Scalable Infrastructure

As companies embrace digital transformation, having the right IT infrastructure in place to enable growth and innovation is imperative. But determining the optimal choices between on-premise, cloud and hybrid models involves complex factors around capabilities, costs and long-term vision.

By first clearly aligning infrastructure decisions to broader business goals, organizations can ensure technical foundations scale to meet strategic needs. The right infrastructure amplifies capabilities in emerging technologies from AI to big data analytics.

Finding an experienced guide in this journey is key. MSPs like Xperteks provide expert guidance based on decades of experience driving infrastructure transformations across industries. Leveraging proven methodologies and practices unlocks maximum value.

Now is the time to take control of your infrastructure destiny. As markets, competitors, and technologies rapidly evolve, scalable infrastructure delivers strategic advantage. Partnering with a trusted MSP provides confidence in mapping the optimal path forward.

Don’t leave infrastructure decisions to chance. Contact Xperteks today to start building technical foundations optimized for the future of your business. Our infrastructure advisors empower your most critical IT choices to enable success both today and tomorrow.

The first step begins with an infrastructure assessment tailored to your unique needs.

Tap into the Power of Managed IT Services and Optimize Your Business Technology Performance

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