Cloud vs On-Premises

Cloud computing has grown in popularity with the promise of saving time and money and improving agility and scalability. What are the factors that should enter into your decision to either stick with on-premises, migrate to the cloud, or move to a hybrid cloud? First, let’s be clear that there is no one size fits all model to help you determine which is best for your organization. The reality is, that you’ll need to do quite a bit of homework and due diligence to determine what works best. While most cloud providers tout all kinds of savings and benefits (after all why wouldn’t they?) costs can in fact get quickly out of hand. Also, on-premises deployments come with their own set of challenges, especially when confronted with significant changes in workload or the need to provide 99.999% resiliency.

On-Premises is not going away!

Cloud is gaining in popularity, and it certainly serves an important role in many an IT organization, however on-premises deployments are not dinosaurs and they won’t go away anytime soon. A number of factors come into play including significant sunk costs, a readily available pool of competent / cost effective IT expertise, and the fact that on-premises applications can often be more readily tailored and adapted to an organization’s needs. When compliance regulations (i.e. data must reside locally) enter into the equation, on-premises is even more compelling.

Also, organization are more likely to stick with on-premises when they are still depreciating their hardware and software costs along with no compelling technical or economic reason to change. Keep in mind to effectively leverage all the cloud has to offer, traditional applications need to be rewritten and built upon microservices – this is especially the case when hybrid cloud enters into the equation. In most instances a “lift and shift” to the cloud doesn’t result in tremendous savings.

Cloud is here to stay!

Cloud based deployments provide tremendous value and save organizations time and money. A low entry cost along with the savings that come with not having to build out or maintain a physical data center reap huge rewards.

Cloud also fundamentally alters how IT personnel are leveraged, enabling them to add even more value to the organization. Because cloud allows for the delivery of resources at lightspeed, whether it is spinning up new applications with SaaS, or provisioning additional servers via IaaS, IT resources no longer need to be devoted exclusively to IT infrastructure and application management. Instead IT becomes strategic – researching and recommending how to better utilize new and different technologies, helping keep their organization’s competitive advantage.

Migration to cloud also makes the staffing and the subsequent productivity of an IT organization far more efficient. Competencies in Azure, AWS, and Google Cloud are all easily transferable. The increased standardization of cloud technologies (i.e. server, storage, network, and application deployment) means that IT personnel can be more readily dropped into an existing organization and hit the ground running. Although one could argue that cloud management is more complex, it is a monolith, i.e. network administration with an Azure infrastructure is the same no matter the deployment.

Cloud vs On-Premises Pros and Cons

The matrix below endeavors to provide guidance as to the factors one should consider when looking towards on-premises or cloud deployments. Like everything else in IT, there are trade-offs, what is right for one organization may be totally inappropriate for another. 

By prioritizing and then determining the type of technical and economic resources your organization is willing devote to each of the areas below, you’ll be able to make a better and more informed decision. 

Conclusion

It really is impossible to make any sort of gross generalization as to whether one platform is going to be better or more cost effective over the other, or even whether a hybrid cloud is more appropriate. Every organization’s requirements and assumptions are unique.

While the matrix above addresses multiple factors, each one needs to be weighed against the economic realities.

For example, the low cost of entry for cloud, especially when compared to the substantial upfront cost for hardware and perpetual licenses can make cloud more attractive.

Op-ex is often more palatable than cap-ex. With that said, it is a good exercise to project costs out over the life of the technology (especially for SaaS).

It is not unusual for the total cost of ownership for on-premises and cloud technologies to eventually converge. Although a subscription may be cheaper year-to-year, it certainly adds up over the years.


Another example - perhaps the organization is developing a new application, it may well be more cost effective to develop and load test an application via a cloud deployment (Iaas), and then move back on-premises for production. It is also possible that a rapid increase in the application’s utilization may make the cloud a more advantageous solution – the deployment would happen quickly and with less capital outlay.

Putting aside the technical merits, IT organizations really need to engage the services of finance to make a compelling and accurate business case. There are simply too many variables in the equation; between op-ex, cap-ex, and calculating net present value... things can get complicated quickly!

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Although the deployment of resources can be quick and easy there can be a significant tradeoff between expediency and cost. Proper monitoring needs to deliver to IT the decisive information they need to accurately size and optimize their deployments. 

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