In today’s enterprise IT world, there are many factors a business must consider determining whether a cloud infrastructure is the right choice.

Conversely, many companies cannot leap into the cloud, instead relying on their tried-and-true legacy and on-premises application applications and software to do business.

ON-Prem vs. Cloud

It is no surprise that cloud computing has skyrocketed in popularity because of the allure of cloud computing and its promise of providing new flexibility for businesses, from saving time and money to increasing agility and scalability.

On the other hand, on-premises software, installed on a company’s servers and behind a firewall, has long been the only product for the enterprise and can adequately meet business needs.

Additionally, on-premises applications are more reliable and secure, allowing organizations to maintain a level of control typically impossible in the cloud.

However, the IT decision-maker agrees that in addition to on-premises and legacy systems, the new cloud and his SaaS applications must be leveraged to achieve business objectives.


Data security is always a top priority whether companies put their applications in the cloud or keep them on-premises. But if you’re in a highly regulated industry, you may have already decided whether to put your applications on-premises. And knowing that your data resides on internal servers and IT infrastructure can increase security.

Companies must purchase a license or copy of the software to use on-premises software. Because the software itself is licensed and the entire software instance resides on the organization’s premises, it generally offers more protection than cloud computing infrastructure. So, if businesses want all that extra security, why are they walking into the cloud as often told?

A disadvantage of an on-premises environment is that managing and maintaining all costs associated with the solution can be exponentially higher than in a cloud computing environment.

An on-premises setup requires in-house server hardware, software licenses, integration skills, and IT staff on hand to support and manage any issues that may arise. This doesn’t even consider the amount of maintenance the company is responsible for if something breaks or stops working.


Cloud computing is different from On-Prem in one crucial way. The company hosts everything in-house in an on-premises environment, whereas in a cloud environment, a third-party hosts everything. This allows organizations to pay as needed and effectively scale up or down based on overall usage, user needs, and business growth.

Cloud-based servers use virtualization technology to host corporate applications off-site. There are no capital costs, data can be backed up regularly, and organizations only pay for their resources.

For companies planning to aggressively expand globally, the cloud is even more attractive because it allows them to connect with customers, partners, and other businesses wherever they are with minimal effort.

You can deploy almost instantly with cloud computing because everything is already configured. So, as soon as a company gets a subscription, the new software integrated into the environment is ready to use. Instant deployment eliminates installation and configuration time and gives users instant access to applications.

For example, EDI software was traditionally hosted on-premises, but recent developments in cloud computing have allowed EDI providers to offer their services through his EDI SaaS model. This development reduced customer installation costs but allowed software companies to create recurring revenue models billed annually.

  • Critical differences between On-Prem vs. cloud



In an on-premises environment, resources are deployed internally and within an organization’s IT infrastructure. The company is responsible for maintaining the solution and all associated processes.


Cloud computing comes in many forms (public cloud, private cloud, cold-blooded cloud, etc.), but a service provider hosts resources in a public cloud computing environment on-premises. However, enterprises can access those resources and use them as much as they want at any time.



In an on-premises environment, businesses retain all their data and ultimately control what happens to them, for better or worse. This makes companies in highly regulated industries more concerned about privacy and reluctant to jump into the cloud before others.


In a cloud computing environment, the question of data ownership is one that many companies – and merchandisers, For that matter, fought with. Data and encryption keys reside with a third-party provider. So, in the event of downtime due to unforeseen circumstances, that data may become inaccessible.



Companies that deploy software on-premises bear the server hardware’s running costs, power consumption, and space requirements.


Companies that choose the cloud computing model only pay for their resources, with no maintenance or upkeep costs. Prices adjust up and down based on usage.



Enterprises, especially those with sensitive information, such as government agencies and banks, require the security and privacy that on-premises environments provide.

Despite the cloud’s promise, security remains a top concern for many industries, so an on-premises climate makes more sense despite some drawbacks and a high price.


Security concerns remain the biggest obstacle to cloud computing deployments. Some cloud vulnerabilities have been publicly disclosed and concern IT departments worldwide. Security threats are real, from employee personal information such as login credentials to loss of intellectual property.

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