Differences between on-premise and cloud computing

Today, just about everything in businesses is data-driven. For instance, making enterprise and market decisions is often informed by carefully analyzed information. Collecting, analyzing, and storing business data requires immense computing power. This is where servers come in; these are powerful large-scale computers used to process and store vast amounts of data. Servers can fulfill requests from other computers and devices through apps, enterprise software, and web applications.

Servers come in a variety of sizes and specs; organizations have to choose the specific builds that best suit their IT demands. Apart from the build, another critical decision is whether to go for on-prem servers or cloud-based servers. This is an important consideration that affects a number of different aspects, including the IT cost, management, security, and IT performance. So, what are the upsides and limitations of either option and how do you choose between the two?

On-prem servers

An on-premises or in-house server is a physical server unit that is housed and operated within the company’s premises. The owner, in this case, the company, is responsible for maintaining and running the server. In this setup, the company creates an in-house data center or server room that is managed internally by the IT department or hired technicians.

Cloud computing

Cloud computing is a modern approach to enterprise IT management. This technology allows the delivery of computing services and resources through the internet. Cloud-based servers are hosted on a remote location and are only accessible through the internet. Instead of setting up an in-house IT infrastructure, you can simply “hire” one that already exists, and pay an annual or monthly subscription fee for it – that’s how the cloud-based server model works.

These servers are also known as virtual servers since they are not necessarily your typical physical servers. Although cloud service providers may have physical servers in their data centers, they employ sophisticated algorithms and systems to distribute and share the server resources among their clients.

Cloud computing, however, should not be confused with server virtualization. The latter refers to dividing a physical server into several independent virtual machines or servers. Virtualization aims at improving IT efficiency and versatility, while cloud computing is about eliminating or reducing reliance on in-house IT systems.

On-premise servers vs. cloud computing

Both on-prem and cloud-based servers have their unique benefits and drawbacks. Although both approaches solve more or less the same problems, they are fundamentally different. Here’s a look at some of the key aspects that set them apart, from a business perspective.

Deployment and cost

When setting up an on-prem server system, you have brought in all the necessary hardware and software and set aside a location to lay the infrastructure. In addition, you have to take care of IT maintenance, repairs, and upgrades. All these costs add up depending on the scale of the deployment.

With cloud computing, you don’t need to buy expensive hardware and software tools. The entire infrastructure, including the communication and network channels, is already set up by the host. Plus, it’s the host’s responsibility to maintain and service the systems. Some hosts also have IT managed services to provide round-the-clock customer support.


In an on-premise server environment, you have full control of the entire system. This means you can configure and use the servers however you like. On the other hand, cloud-based servers are controlled by a third party, and a lot of technical configurations and details are often taken care of beyond the user’s control. With cloud-based servers, you have to comply with the host’s terms of service, which may dictate fair usage policy, security protocols, and other critical characteristics and behaviors of the system.


IT and network security are some major global concern at the moment. Many institutions that deal with sensitive data opt to set up their own data centers and entrust data protection to their own devices for fear of cyberthreats. That said, many businesses, particularly SMEs, are keen on adopting cloud service to meet their IT security requirements. When it comes to security, it’s a bit of a mixed opinion. But it boils down to just how much risk you can take and the level of protection that you need and can afford.

Cloud servers, however, are much more reliable at data backup and disaster recovery. And although cybercrime is at an all-time high, cloud service providers are continually upping their cybersecurity game. What’s more, you can add several layers of data security on cloud-based servers at little cost compared to on-prem servers.

Choosing between on-prem and cloud-based servers

IT costs, and the underlying business model is two of the main factors that many companies use to decide between on-prem servers and cloud computing. Many enterprises that opt for cloud-based servers are often attracted by the low IT cost, convenience, flexibility, scalability, and robust security features. Companies that go for on-prem servers have the financial backing to see the project through and mostly want to retain the right to control and manage their own IT resources.

Feel free to get in touch with us to learn more about cloud computing and server management. We love to help businesses as well as individuals overcome IT challenges and realize modern enterprise solutions.