The cloud vs. on-prem debate continues to rage. This is particularly true for organizations in data-driven industries like healthcare, financial services, legal, and gaming because maximizing uptime is so crucial to success. The choice of the right computing infrastructure can have an impressive effect on customer satisfaction and internal efficiency.
At the same time, by choosing the wrong infrastructure, you may get hit with higher costs later on, especially if your environment doesn’t support your growth. This article will dig into how to choose between going with the cloud or sticking with an on-prem architecture, particularly for organizations with growing teams.
Even though the reasons why companies stick with on-premise architectures vary based on need, there are a few common denominators.
On-premise setups have been the go-to solutions for many years, particularly because networking infrastructure wasn’t always able to support huge amounts of bandwidth and real-time operations. Decades ago, relying on an off-site data center for computational functions was a ridiculous proposition. Internet speeds simply couldn’t keep up.
This highlights one of the original benefits of on-prem, one that persists today: speed. While most companies can get by with the speeds they get with cloud computing, some absolutely need the ultra-fast connectivity that on-prem architecture makes possible.
For example, a manufacturing company may set up an on-premise network of handheld scanners, edge computing devices, and in-house storage, connecting the entire system to a locally hosted enterprise resource planning (ERP) system. If they need to adjust the speed at which certain machines work in a fraction of a second, they can be relatively confident their system won’t introduce the kind of latency that could hamper operations.
However, the need for ultra-responsive, real-time computations is relatively rare. If a company can function perfectly well with the high-speed connections available from cloud providers, is there still a reason to use an on-prem system? Some organizations say yes, primarily because they need granular control.
Many feel they have greater control when their hardware is physically at their fingertips, and this is what an on-premise infrastructure provides. When you keep everything in-house, you can make it so all data flows stay within your four walls.
While this may sound like an “old school” way of thinking, it has its merit, especially for organizations concerned about security issues.
For instance, imagine a fictional bank called YouFirst Financial. They choose to store and process all data in-house. This means every customer transaction gets stored on their servers. Every loan application sits on a hard drive inside the bank. YouFirst’s dev team built its own set of proprietary trading algorithms. Those, too, sit on a server down the hall.
The team makes sure their system is never connected to the internet. Even though this means tons of manual data entry, especially when it comes to entering applications and transaction information, they feel it’s worth the extra effort; the risk of a breach is minimal.
An on-premise setup makes it relatively easy to predict your costs, especially because you don’t have to worry about increasing fees from cloud providers. Even though the upfront cost of building an on-premise architecture can be hefty, some teams feel it’s worth it because future expenses can be more easily forecast.
This is particularly true for companies with very simple digital architectures and modest growth projections. For example, a law firm can set up two on-premise servers, one that hosts their website and another that hosts their software. Given the relatively straightforward nature of some firms’ computing, this could be enough.
For instance, the firm could host an Orion Practice Management system for administrative purposes. It could use ProLaw from Thomson Reuters for document management and accounting purposes, and LogicalDOC for managing case information. The company could also buy site licenses for Microsoft Office tools.
As long as they don’t need attorneys and support staff to access any of these solutions while outside of the office, an on-premise setup makes it easy to predict future expenses. If a server gets overwhelmed, they can buy a new one, for instance. They may also choose to purchase multiple servers up front to make future costs even more predictable.
Unfortunately, rapid growth or an acquisition may put them in a bind, but for companies with simple architectures and slow growth, on-prem might be able to work.
Despite the speed, control, and cost predictability of on-premise, the disadvantages often outweigh the benefits.
It can easily cost hundreds of thousands of dollars to set up a comprehensive on-premise infrastructure, and this is simply not an option for many organizations. For instance, an effective setup may include:
The hardware price tag climbs quickly. But the bigger expense often ends up being installation costs. Installing and testing an internal network linked to an on-premise server can take weeks. It’s not just about connecting cables and running them through the ceiling. Compatibility issues, heat management, and networking problems all come with their own labor-intensive challenges.
In the end, many companies would prefer to just connect to an already built cloud-based infrastructure through their existing internet connection.
As alluded to above, what happens if you have an on-premise architecture and acquire another company? Even if you had the funds to duplicate your environment and establish a VPN between your office and theirs, would the acquired company’s team be on board? For instance, what if they were already using on-premise VMware and would prefer a VMware to cloud migration instead of sticking with the status quo? What if, like many teams, they’ve already grown used to using convenient cloud-based tools? Questions like these give many IT teams a reason for pause when it comes to the on-prem vs. cloud discussion.
Scalability is also an issue when it comes to normal, organic, internal growth. As a financial services company acquires new customers, it naturally needs more staff to serve them. Adding a cloud-based workstation is fast, easy, and inexpensive. But buying a new computer, peripherals, and installing the needed software can take a lot of time and financial resources.
Modern businesses need to be able to pivot as needs dictate, and this can be extremely difficult with an on-premise architecture. Consider an example: A financial services company receives feedback from its customer service team that clients prefer an in-person approach to interactions with automated systems. There’s also data that shows higher customer retention numbers for clients who had a human handle their issues instead of having to use a chatbot or online resources. So, upper management decides to reallocate some of the sales team to the support team. But this requires each sales team member to have all-new software installed, which means they also need the kind of device that can support it.
An on-premise architecture could make this both difficult and expensive. But with a cloud-based infrastructure, the IT team could simply reach out to the cloud provider, request new instances of the necessary software, and have the new support reps up and running in a day (or less).
Even though on-premise systems may seem more secure because they’re shielded from the internet, they can be slow-moving targets for inside attackers. With a cloud-based system, an attacker would need to have the necessary permissions, a username, password, and one or two additional verification methods if the organization uses multi-factor authentication. If they chose to attack, the system could track their point of attack, record their IP address, and, of course, if there’s anomalous behavior, automatically stop the assault.
With an on-premise setup, an attack can be far more straightforward. Someone can use another employee’s credentials, log in, and plug a USB device into the computer. The device could either deploy malware or be used to store stolen information.
It may also be difficult to catch an internal attacker because the system may not flag their activity as suspicious. After all, it looks like a legitimate employee gained access as they normally would.
In addition, an on-prem system may have outdated security tools. With a cloud-based environment, your cloud provider ensures you have access to the most up-to-date anti-threat tech. An on-prem system may have several vulnerabilities, such as:
However, with cloud-based infrastructures, the cloud provider is responsible for eliminating these and other vulnerabilities.
Whether you use public, private, or hybrid cloud solutions, a cloud-based environment eliminates many of the challenges posed by on-prem systems and introduces several other benefits for growing teams.
Thanks to predictable monthly payments, cloud cost optimization is simple. With a cloud subscription model, you don’t have to invest heavily up front to establish an effective computing infrastructure or achieve effective cloud infrastructure management.
For example, imagine a fintech company that has decided to build an AI-powered fraud detection solution. The platform can identify fraudulent applications and nefarious uses of its services, as well as automatically stop illicit activity.
If they had to build their own internal data center, the costs could be exorbitant. A server capable of hosting a real-time AI-powered security solution can easily cost as much as hiring a new employee. And that’s just one piece of the tech puzzle.
On the other hand, with a cloud-hosted architecture, the company can develop its system using existing cloud resources and even a variety of pre-built tools. For instance, if they used AWS, they’d have access to Infrastructure as a Service (IaaS) resources like virtual machines and databases already designed and deployed in the cloud. If they needed extra storage to maintain the system’s training data, spinning up additional storage in AWS is simple.
Further, the dev team could build the solution collaboratively in AWS’s cloud environment, using pre-made tools and components along the way.
In each use case, the cost savings associated with using the cloud end up being multifaceted. In the above example, perhaps the company predicted the upfront savings when it came to establishing the architecture for their solution. But they also end up saving on development resources and team collaboration tools.
A cloud environment enables fast, inexpensive flexibility and cyber resiliency in ways that an on-prem solution can’t. The versatility the cloud enables applies to virtually all industries, but especially those driven by data-heavy operations.
A hospital, for instance, may need to onboard a remote help team to manage incoming calls and requests for information. While the team is physically remote, they still need to be able to connect to the hospital’s software and communications system. Giving remote employees access to the software and connectivity they need to support patients is simple with healthcare cloud solutions. The hospital’s cloud provider would understand the kinds of connections needed to add a new team to the network, as well as provide the team with HIPAA-compliant cloud hosting. The provider would also be able to recommend the best software options — those that balance usability and functionality — saving time during the onboarding process.
Further, a cloud provider can help design a complete digital infrastructure from the ground up for the remote team. This may involve virtual machines, connectivity between team members, and a variety of cloud cybersecurity services, all of which can come with Desktop as a Service (DaaS) solutions. In addition, the provider can recommend the most efficient tools for managing the team, perhaps using centralized, dashboard-enabled team management software.
With the cloud, there’s no need to cap your creativity. You can always alter your infrastructure to actuate your ideas as opposed to letting infrastructural limitations guide what’s possible.
The ability to enable connectivity with anyone who has an internet connection seals the deal for many considering the cloud. The connectivity the cloud makes possible is essential for teams with:
Since many organizations depend on several different kinds of software to run their operations, having access to the most recent, highest-quality tools is essential, and the cloud makes this possible.
With an on-premise system, the IT team has to manually make sure everyone has the most recent updates installed on their computers. If someone forgets to update their software, compatibility and security issues could result. With the cloud, however, your provider ensures everyone is running the most recent version of your software.
Cloud providers can also recommend software that works well in their environments. For instance, a law firm using an Azure environment may opt to use RelativityOne, particularly for eDiscovery. RelativityOne is built on the Azure platform, so it works especially well in that environment. The firm would also get access to Azure Virtual Desktop support, if needed, if they used any of Azure’s DaaS services.
Integrating in the cloud is often very simple because the data stored in cloud software is easy to port to other apps in the same cloud environment. This can simultaneously eliminate both connectivity and compatibility issues as you connect apps to your cloud environment.
The integration capabilities of the cloud are especially pronounced when working with an ERP tool. Even organizations with many apps running in a single cloud environment can make their data available from a single, centralized ERP.
Consider a gaming company as an example. With an on-premise architecture, it would be very difficult to integrate the gaming behaviors of individual users with a customer relationship management (CRM) system. Data siloes and processing limitations would surely be an issue. But with a cloud-based environment, this is relatively straightforward.
For instance, the system can connect real-time insights from a player’s gaming experience with a CRM and automatically perform actions accordingly. If a player completes a quest, the game can send the time it took to complete the mission, when it happened, and their score to the ERP. The ERP then sends that information to the CRM, which generates a congratulatory email or alert, such as, “You’re AWESOME! You completed that quest 25% faster than the average player!” This may boost player engagement and time spent in the app, as well as the overall customer experience.
Cloud environments remove shackles that could otherwise restrict growth. Teams that are either in a growth phase now or that need to enable future growth benefit from the agility of cloud-based tools and systems. Adding new team members is more straightforward. The costs associated with expansion can be far less. You also don’t have to worry about whether your infrastructure has the most up-to-date software and security tools.
RapidScale’s managed cloud services and cloud migration services can shave many hours off a cloud transition or other implementation. Also, with RapidScale’s co-managed IT services, you can pick and choose which services you want handled off-site. Learn more by sending our team a message today.