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On-Premise, Cloud, or Both? Four Considerations to Build Your Strategy

Speed, accessibility, scalability, cost, and security are major considerations for any organization in their quest to deliver the right IT solutions. Today, organizations are looking for ways to deliver faster services, improve product development cycles, increase operational productivity, and mange dynamic workflows.

However, businesses are still searching for the best option when determining whether to have their IT resources on-premise or in the cloud. In fact, according to Spiceworks 2020 State of IT report, 98% of businesses are still maintaining their on-premise servers.

So how do you effectively analyze enterprise needs, current and future operational costs, and business trajectory to decide what should be on-premise and what should migrate to the cloud? In addition, how do you determine the best time to make the transition? Below are some items to assess and help you build your plan.  

1. Understanding Resource Deployment and Speed

On-Premise: When resources are on-premise, it provides access to an internal network that is available at any time. Users are not reliant on their internet connections or network broadband to access data — slow speeds or downtime will not affect productivity. This means workloads that require regular large transfers won’t be impeded. Companies also have direct control over their IT resources, such as servers or software, allowing more autonomy with updates, modifications, and maintenance. The only users who are at a disadvantage are remote workers as they are reliant on their internet connections for access to the servers.

Using on-premise software involves installing, testing, and deploying it across all company users. This is time-consuming and ties up staff and operations. All these additional responsibilities have implications on costs as well.

Cloud: A trend that is gaining momentum due to the global pandemic is the wider adoption, and greater appreciation of, cloud computing. It has certainly allowed for more efficient workflows and access to IT applications for remote or distributed teams and systems. Another major advantage is that an external team of specialists provides management services, so internal IT staff are not encumbered by tedious software updates, patches, and network monitoring. These are done in the background without affecting a company’s operations.

Unfortunately, the user experience is based on the reliability of one’s connection to cloud services. A slow speed or loss of connection can affect accessing files or downloading data, and this also applies to remote users accessing on-premise IT applications. An additional point to consider is that commercial off-the-shelf software utilized by cloud services is often designed for the industry and not for a specific company. This offers less flexibility to organizations.

Cloud services often offer “just in time provisioning,” where an organization can easily scale their services. This allows for greater flexibility, but the terms of a subscription should be very carefully reviewed. Often, when a subscription is assigned, it is for the entire term of the agreement, so there is a risk of paying more for services you may not need in the future.

2. Consider the Costs, Especially Hidden Ones

On-Premise: Generally, costs are higher when servers and software are hosted onsite. There is an output of capital investment, not just for the hardware and software, but also for the associated overhead costs of housing the infrastructure and keeping it running. Operational costs also increase due to the need for a dedicated IT staff to monitor the network. This is further complicated by multiple offices, a large mobile workforce, or remote and distributed employees, all of which drive operational costs.

However, workloads that require high data transfer might favor the hefty capital investment outlay. If you are moving data in and out of a server, there is no cost if it’s done on-premise. In contrast, public cloud services may involve a fee each time you move data out of the cloud, and that cost can quickly balloon unnoticed.

Cloud: Companies immediately eliminate their capital investment expenses by moving to the cloud, but will bear high operational expenditure in contrast. However, cloud computing does offer customization of services. Companies therefore have greater flexibility to adjust services to their needs — adding or removing applications to accommodate current and future budgets.

Although you should be aware of the hidden costs, keep in mind that cloud services are based on a consumption model. The more storage you require, the higher the cost. And know that software subscriptions have long-term costs associated with the development of cloud-based software. Evaluate if you truly require the latest version of the software. Sometimes paying a licensing fee upfront, instead of a subscription, might be more affordable in the long run.

3. Assess Your Scalability Needs

On-Premise: Organizations need to be quick to adjust to market conditions, stay competitive, and rapidly scale operations. For businesses with on-premise IT resources, this means adding new hardware, assessing current software and updates, and recruiting expertise to build and expand the infrastructure. The time lost in scaling also means a loss in revenue.

Cloud: The ability to scale up (or down) quickly is an undeniable advantage of cloud services. All it takes is a click to adjust services or storage space. The change is invisible to the user, but the benefits are immediate. It gives a business the agility to react without questioning if the hardware and software resources can respond with similar agility

4. Recognize Data Sensitivity and Security Assurance

On-Premise: The security benefit of having your data stored on-premise is due to the closed network within which it is located. This is critically important to industries that handle sensitive information, such as healthcare and finance. Companies can install additional data protection tools for further peace of mind and limit access to the data.

However, you also assume a greater risk of data loss in the event of a server malfunction, damage, or hacker infiltration. If a company chooses to have their IT resources on-premise, it is advisable to ensure regular backups.

Another consideration is that third-party providers must account for strict privacy and security requirements, such as GDPR and CCPA. Businesses must be prepared to incur the expenses of audits and certifications, which can drive up costs considerably for an on-premise solution.

Cloud: Data backups are easier and regularly done on the cloud. Companies utilizing cloud services know that even if their data is accidentally eradicated, they can immediately access the critical information. Of course, you are entrusting a third-party to manage and secure your data. Before partnering with a cloud service provider, look into their encryption processes, check if they support single login and multi-factor authentication, and clarify their security best practices and procedures.

The Hybrid Alternative

Sometimes, organizations create a solution that combines the advantages of both local and remote resources in a hybrid cloud. This alternative augments the performance and capabilities of traditional storage and software resources, and provides businesses with a more flexible and optimized IT architecture. A hybrid solution can provide:

  • Faster time-to-service and reduced deployment durations.
  • A flexible infrastructure that can be quickly fine-tuned to address specific enterprise requirements.
  • Customized protection options with the ability to leverage layered and built-in security.
  • Scalability to adjust to business cycles and growth stages.

Improved cost-effectiveness by reducing the necessity to further invest in hardware and software.

Taking the time to scrutinize and fully understand the needs of your team, your budget, and your organization’s long-term goals will help you on your journey to developing the right plan.

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