Cloud vs on-premises

Last update: 2023-06-27
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Analyzing and determining the type of technical and economic resources an organization is willing to devote to each of the areas below allows merchants to make tactful decisions about which hosting solution is the best fit for their business.

The following table outlines the advantages and disadvantages of cloud versus on-premises solutions:

Factors On-Premises Cloud
Advantage Disadvantage Advantage Disadvantage
Cost Possibly more cost effective in the long term Considerable upfront hardware and software costs (cap-ex). Predictable subscription pricing. Long term cost projection is required.
Any mistakes during development can be very expensive for the business. Costs can be budgeted to op- ex and no upfront hardware/ software investment required. Licensing costs can mitigate hardware savings
Security The organization can control all the data locally. Internal resources require specific skills and knowledge of the infrastructure. Advanced data security is available and easily manageable for organizations. Aggressively targeted by hackers
No third-party access to the data. If organizations lack the applicable skills and expertise, it risks significant exposure. Data could be accessed by 3rd party.
Scalability Physical control over the hardware means upgrades can be tightly controlled Need to plan well in advance to changes in demand because of the time necessary to research, justify, order, and deploy hardware. Cloud resources can be rapidly adjusted to accommodate specific demand Costs escalate when the cloud infrastructure is improperly managed and not properly tracked
Could be stuck with excess IT infrastructure which may or may not be able to be re-purposed
Upgrades The organization can control when the upgrade takes place and what features are included/excluded as part of the output Time consuming exercise which can impact other work pipelines Fast and cost effective exercise with low impact to other work streams SaaS provider manages the upgrade, and the organization is not always aware of the final output and impact on the site
Costly exercise if not managed appropriately
Platform Customization Readily able to customize the platform to meet unique requirements Customizations can lead to reliability and software support issues SaaS platforms are quite stable. Updates are iterative and easy to manage SaaS minimises the ability to modify the platform
Deployments Technology can be deployed based on unique IT infrastructure and application requirements Complexity can mean lengthy and difficult deployments SaaS is reliable and easy to execute deployments Normally, SaaS is implemented to a lowest common denominator, which can sometimes cause limiting functionality
IT Support Infrastructure and application expertise are readily available Dedicated IT team is necessary, especially when applications are tailored to meet an organization's unique requirements. The caution of scale inherent to cloud deployments mean that IT support can manage more with less time and effort. The learning curve for cloud is significant and adequately trained personnel are expensive

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