Busting the Myth: The True Pros & Cons of Cloud vs On-premise

Companies that are getting a new IT system or a solution rarely even think about investing in an on-premise version these days. The reasons are obvious: everything is moving to the cloud and businesses that want to stay relevant have to keep up with it. That said, some companies may still stop and think before investing in an ERP, PIM or other IT solution. On-premise or cloud?

The Traditional Point of View

The claimed pros & cons of on-premise vs cloud actually mirror each other.

* For years, high security was claimed to be the main benefit of an on-premise solution. This is slowly but surely changing — nowadays many people consider the cloud to be much more secure. We’ll get to that in a minute!
 
When browsing the Internet (or asking an AI) in search for a definitive answer to the question “Cloud or on-premise?”, you will probably get more or less this list of benefits and drawbacks. But are they really true? Hasn’t the world of IT changed? Let’s debunk some myths here!

The Modern Point of View

About 10 (and more) years ago, on-premise used to be preferred by both security and IT experts. No longer true. With the rapid evolution in the IT world that we’ve seen for the last two decades, it would be foolish to repeat the old truth without stopping and evaluating what the up-to-date cloud solutions have to offer.
 
It’s actually pretty simple: The longstanding advantages of on-premise solutions have become disadvantages in today’s world. What was once the main reason for an on-premise solution is now more of a drawback.

The Security Issue

For a long time, high security was presented as the main benefit of an on-premise solution. Especially for businesses that could get harmed by a data leak, on-premise was the only solution they would go for.
 
With that said, it’s necessary to add that the system needs to be properly and regularly maintained, and all the security rules have to be kept. In reality, people are just people. And people often get sloppy when it comes to respecting strict security rules.
 
That’s why modern robust cloud solutions are a solid match for on-premise. And often, they even exceed it. Especially when it comes to cloud solutions secured by big brands. Almost no one in their right mind would consider Microsoft products insecure, right? For anyone who knows a thing or two about IT, Microsoft has become a role model for stability and security.
 
At PIMICS, we can only vouch for that. As a Microsoft partner, we know first-hand that their emphasis on security is unmatched. Microsoft even announces regular hacking challenges, dares people to breach their security and promises to pay a generous remuneration to those who succeed. Rarely does that happen. We don’t know about any on-premise solution that would come close to such a level of state-of-the-art security.
 
This is a valid statement for most cloud solutions by established providers — they’re in fact more secure than most on-premise solutions. Entire teams are taking care of cloud security, whereas with on-premise solutions, it’s all in the hands of in-house IT teams.

Data Recoverability

There’s one more point of view to consider: For a lot of companies, security equals control. Control over their data. Which they rather keep on premise where they can always access them. We do get why some companies still hesitate to “hand over” their data to service providers, fearing they won’t be able to access it if necessary. But this concern is no longer relevant.
 
Microsoft, for example, provides data upon request. As do most providers. Moreover, when you hand over your data to an established SaaS provider, you’re relieved of performing regular back-ups. Your provider takes care of that, most likely backing up data more regularly and rigorously than your in-house IT team ever would or could.

Upgraded Cloud Security

There are two basic types of cloud that companies can opt for:

• Public Cloud: An online space and IT infrastructure that is shared by more companies. In our book, this type of cloud is sufficient for smaller businesses that don’t need a super robust (or tailored) solution.
• Private Cloud: A sort of hybrid solution, a combination of on-premise and standard cloud. The IT infrastructure is still in the cloud but the cloud is private for one company only. It can even be physically saved on a server which the company places in their location.

Customisation Options

Yes, getting an on-premise solution opens doors to endless customisation options. With an on-premise solution, you get the real meaning of tailored — the solution is crafted to fit your needs and requirements perfectly. That is still valid but it comes at a price. And we’re not just talking money.
 
In today’s fast evolving world of IT and technology, nothing is set in stone. And sadly, an on-premise solution often is — engraved in the hardware you need to purchase in order to use it. What are we getting at? Updates and maintenance of your customised on-premise solution require a lot of time and effort, and may even ask for additional programming. In comparison, updating & maintaining a cloud solution is a breeze — it may even happen automatically, for all users at once, with you barely noticing. That applies to all updates, upgrades, bug fixes, new features and integrations.
 
In other words, keeping an on-premise solution in sync with emerging new technologies is quite a quest. A costly one, we may add as upgrades are rarely for free. On the contrary with cloud solutions, the price of updates & upgrades is covered by your subscription plan.
 
Take Microsoft’s Copilot as an example — your personal AI agent of sorts which is designed to perform tasks for you upon request. This integration is not available for on-premise solutions and most likely will never be. The IT world has been favouring cloud solutions for a while now and there’s no indication that this trend should change.

Independency of Internet Connectivity & Reliable Performance

For a long time, it was believed that company’s systems should not be fully dependent on the Internet. There’s still a grain of truth in that — especially for businesses located far from large cities. But come on, in today’s world, people consider Internet connectivity their basic human right. The coverage is much better than it used to be, making a reliable Internet connection a norm even in remote areas.
 
For these reasons, we consider this long-claimed advantage of an on-premise solution no longer true. What company can truly function without the Internet? The same applies to performance — sure, an on-premise solution that runs on your company’s servers guarantees a stable infrastructure and performance but at what cost? Building your own server room requires a significant investment that most companies would need to think twice about.

Initial Investment

A drawback of on-premise, a benefit of cloud. This is still absolutely valid, maybe even more than before. Getting an on-premise solution requires investing in hardware & software — which will become dated very quickly. Whereas a cloud solution is much more affordable and easy to be kept up-to-date. This is a great benefit especially for new businesses.

Scalability

This pro/con is closely related to the initial investment. It’s easy and usually very affordable to change a subscription plan for a cloud solution if a company outgrows their systems. It’s even easy to scale down if times are rough. Scaling an on-premise solution down is practically impossible. Once you have it, you have it for good. Scaling up can happen but again — with significant investments.

When companies with a cloud solution expand to new markets, they just buy a new licence. An on-premise system would require buying and installing a new software (and most likely purchasing some hardware to support it).

Eventually, We’ll All Move to Cloud

We believe the future is in the cloud. Most technological companies share this opinion, as far as we know. It’s more secure, more flexible, more scalable. Better-fitting today’s world.