On premise vs. cloud: a comparison

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More and more companies are moving their software to the cloud. However, this does not mean that this decision should be made prematurely. On the contrary, it is important to weigh up for which business case the cloud brings concrete advantages and for which an on-premise solution remains the better choice, at least for the time being. To help you make this decision, here is a brief comparison of the differences, benefits and risks of cloud and on-premise solutions.

The hype surrounding the cloud is well deserved, if only because it masters three of the biggest challenges of digitization in one fell swoop: energy consumption, running costs and scalability of software – here, on-premise solutions simply cannot keep up. The latter score more when it comes to data sovereignty and control over it.

Data security & compliance

A frequent argument in favor of on-premise software is data security. After all, if you host your software on your own premises, you have sole control over the data and do not hand it over to third parties. In addition, many companies have a compliance policy that quite rightly makes the maximum protection of sensitive data the top priority – out of self-interest, of course, but also in order to comply with applicable laws and regulations.

Depending on the industry, the regulations regarding data protection vary in their restrictiveness. This also depends on the type of data involved. In banking and healthcare, where much data is very personal and highly sensitive, stricter guidelines traditionally apply, so skepticism about the cloud is more pronounced here than where only marginally confidential data needs to be processed.

But cloud providers also know their duty of care when it comes to handling third-party data. Because, of course, the same applies to them: If you want to hold your own in the market, you will have to invest in the trust of your customers. And if, as in the case of the cloud, the market is global, they must also comply with the national data protection laws of those countries in which they want to be successful in the long term. In this respect, it is in the cloud providers’ own interest to further improve and develop data protection in the cloud.

And what is often overlooked: Even with on-premise solutions, IT security is not a foregone conclusion. Because all web applications, without distinction, can become the target of cybercriminals and should be protected accordingly. And depending on how well you are positioned or advised here, IT security in the cloud may well be better than your own.

Excursus: Private vs. public cloud

In the public cloud, the storage location of the data is determined exclusively by the cloud provider. In the private cloud, the entire infrastructure is reserved for only one cloud customer and can either be hosted by the customer himself on site or in a data center of his choice. In terms of data sovereignty, the latter is therefore ahead for obvious reasons.

Effort and costs

The disadvantage of on-premise solutions is that the costs of maintenance, hosting and operation can be exponentially higher than with the cloud. This is because on-premise installation requires hardware, space, usage licenses, integration measures and administrators who are responsible for management and ongoing operation. Added to this are the expenses that can arise in the event of a possible error or damage, which are difficult to calculate.

With a cloud solution, maintenance, hosting and operation are the responsibility of the cloud provider. This has the great advantage that the cloud customer only pays for the resources actually used and has no costs for the precautionary provision and maintenance of ultimately unused hardware.

Added to this is the temporal synchronicity of demand and use: because everything is already configured, the resources in the cloud can be scaled ad hoc: If demand increases, you simply add some, if it decreases, you switch them back again. In this way, not only can main load phases be balanced, but disruptive events and volatile markets can also be taken into account. Time spent on installation and waiting for bureaucracy do not exist. Maintenance and servicing costs are not incurred.

Hybrid cloud solutions

Those who do not want to or cannot fully opt for one of the two models are often helped by a hybrid solution that combines the best of both worlds.

The term hybrid cloud often refers to a hybrid of private cloud and public cloud, but it can also be understood as a hybrid of private/public cloud and on-premise. In both cases, it is important that the cloud customer determines the type and scope of cloud use himself and combines the different models in a way that makes sense for his individual business case and digital strategy.


Use the Cloud as a Service. Take advantage of what brings you concrete, measurable added value: be it significant cost savings in maintenance, hosting and operation or more flexibility and scalability with regard to new business ideas, new target groups and new market opportunities. And you are in no way forced to compromise on data security: you can tailor your cloud usage to be compatible with your standards & policies.

Jule Witte

Jule Witte

Presse & Kommunikation
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