Last updated: Cloud vs. on premise: Benefits, differences, cost considerations

Cloud vs. on premise: Benefits, differences, cost considerations


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As the world of enterprise IT continues to evolve, there are a lot of factors a company has to consider when making a decision regarding cloud vs. on-premise for their data center. While agility sounds great in theory, sometimes legacy programs and on-premise applications offer more familiarity and sense of security for larger companies.

Cloud vs. on-premise: Cost considerations

On-prem operations mean that there’s a lot of capacity invested in operating infrastructure and services, without any room for improvement. Today, the best strategy of any long-term-thinking organization is migration to the cloud. This strategic move can be perceived as an investment in future growth, flexibility, and mobility.

The investment into cloud migration is surely a wise one. Software providers are increasingly offering new features only available in the cloud, so if you want to use them, you can’t stay on prem forever.

Long term, the cloud helps organizations save resources year over year. There are no additional operational costs and the overall maintenance comes with better and faster support. Moreover, enhanced internal processes also save time and money. All of that together improves the agility of your organization, making it future-proof.

Cloud vs. on-premise: The human factor

An on-prem solution requires your staff to focus its capacity on infrastructure service and the digital foundation. This overloads your team and reduces your ability to focus on business excellence and building a competitive advantage.

The cloud allows your people to focus not on catching up, but rather, on building up. This is something often that’s overlooked when thinking about “IT costs.” The truth is, the value your people can bring goes way beyond the cost invested into the cloud, thanks to all the advantages the cloud offers.

3 benefits of cloud vs. on-premise

  1. Infrastructure and automation.
    The vendor takes full responsibility in this area. Scaling is another important point to mention here, which is crucial in an era of constantly changing customer expectations. Security management also is much better and more trusted when handled by one big, experienced vendor rather than several small ones that handle separate parts. 
  2. Organization and employees.
    People can really focus on providing strategic value for the business rather than spending time on operating aspects that can be provided by someone else. It frees up the talent capacity and paves the way for innovation. If you’re 100% focused on catching up and keeping your on-prem platform alive, you’ll be hard-pressed to add anything new to your business model – ultimately making the business vulnerable.
  3. Specific cloud-only features and high-update cadence.
    For example, features in a cloud e-commerce solution might include decoupling the checkout process for increased flexibility, enrichment of the search functionality with AI and other advances, or supporting the in-store and POS processes.

When to make the move: Sooner the better

Certainly, some businesses may find it more convenient to remain on prem for as long as possible, accepting a reduced annual upgrade cadence. This means that they have to invest in efforts to keeping the platform updated. While the costs are lower and there are no changes in the existing operations setup, innovation capabilities are limited.

When they do decide to bring in some innovation, it’ll be a lot harder because there’s no proper foundation for that innovation. Since there are more cloud-only features being introduced, eventually all businesses will have to move to the cloud – and at that point, migration will come with a way higher cost.

Those who migrate early will immediately start getting cloud expertise and leveraging new cloud-centric architecture. A cloud platform is always up to date thanks to new features and seamless upgrades. Yes, a decision to move to the cloud means that your business needs to invest a certain effort in this organizational change. But the ones who decide to do it now are getting instant benefits and creating room for innovation.

At the end of the day, all organizations are already feeling the pressure to constantly modernize their strategies and enhance existing platforms. Technology is rapidly changing, which means that the foundation must be agile, flexible, and scalable.

At one point, on-prem operations will not be an option anymore. It’s not a question of if, but when, you should make your move to the cloud.

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