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By: Angela Cook on December 20, 2021

On-Premises Vs. Cloud: 3 Differences To Consider For Your Business

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There comes a time when your business needs to decide on which infrastructure model to adopt for its operations: on-premises or cloud.

Will your company rely on a more traditional on-premises or a cloud-based infrastructure to carry out business operations?

Maybe you never realized you had an option between the two, and you now realize that an on-premises solution no longer meets your needs.

Regardless of how you got here, you’re looking to explore your options, and we’re here to help.

We get it. It can be tricky making a significant change regarding your infrastructure when you have a business to oversee.

At LDI, we have implemented cloud solutions for clients with on-premises infrastructure and those with a cloud infrastructure. Neither one is wrong to implement. We recommend solutions based on your current business needs, budgetary requirements, and long-term goals as a company.

In this article, we’ll define what both terms mean. Then we’ll take a closer look at the main differences between the two options and the pros and cons of an on-premises infrastructure versus a cloud infrastructure. By the end of this article, you will better understand your business’s better fit.

What Does An On-Premises Infrastructure Mean? 

The term on-premises refers to an onsite software and hardware infrastructural setup.

The easiest way to think of it is the system resides in your business’s servers, on your premises.

For an on-premises infrastructure, your business would be in complete control of the setup and responsible for everything related to running the servers and software system it hosts.

By everything, we mean the thorough monitoring and management of the on-premises set up to maintain it while keeping it secure and up-to-date.

An on-premises setup offers the same flexible, virtualized services as a public cloud does but provides more control over the visibility into the infrastructure.

One of the main perks of an on-premises solution is that the authorized employees can only access it within your organization.

For on-premises, your business would use a private cloud through the servers you own that reside onsite. The private cloud can be accessed by only one organization, which would be yours.

Additionally, suppose you don’t have an in-house IT department that can effectively maintain your self-hosted servers. In that case, your business can rely on the help of a third-party outsourcing company or managed IT provider for assistance.

What Does A Cloud-Based Infrastructure Mean? 

A cloud-based infrastructure is hosted and accessed through the cloud.

A cloud-based setup entails your information is a public cloud, data-center hosted.

Using a Software-as-a-Service (public cloud) model means your business won’t have to buy any licenses or hardware.

Instead, your business would pay a subscription-based monthly fee for service, including the servers, network, and operating systems involved to host the software.

Cloud-based infrastructures can be hosted by using a software-as-a-service (public cloud) model and then maintained and monitored by the public cloud provider you choose.

Common public cloud computing platforms include Microsoft Azure, Amazon Web Services (AWS), and Google Compute Engine.

On-Prem Vs. Cloud Comparison

Choosing between either option depends mainly on your business’s current needs, existing infrastructure, and goals for the future.

Now that we’ve outlined both options let’s provide a more in-depth comparison between both infrastructures.

1. Storage & Scalability

Data storage and scalability are primary reasons companies look to change their infrastructure.


An on-prem infrastructure offers a finite amount of storage and computing power. 

Since on-premises resources such as servers have limited memory, businesses should consider how they want to use them, what they’re storing, and how long they are thinking of maintaining them.


In comparison, the cloud offers scalability.

Companies often migrate to the cloud because they view it as a scalable resource.

In more detail, cloud scalability provides businesses with the option to scale thor amount of storage space up or down; while also adding or removing the number of authorized users that have access.

Your business would then have the option to utilize as much storage, computing power, or services you’d like at any given time due to the cloud providing “on-demand” services.

If your cloud computing needs are growing, a scalable option would be in your best interest to add more resources as you see fit.

2. Security Features

There is no clear answer as to which infrastructure is better when it comes to security. Both on-premises and cloud deployment each have their own benefits.

That’s why it’s imperative for leaders and administrators within your organization to understand the security capabilities before making a decision fully.


Your business has complete ownership of securing the servers you own in on-premises infrastructure.

This means that if you’re thinking of operating your own data center, you would also need to ensure that you have the right security resources in place to effectively mitigate risks as they before and after they infiltrate your network.


Cloud security is a shared responsibility between you, the customer or buyer of the cloud resource, and the cloud services provider (CSP) that implements in

CSPs are responsible for the security of the cloud resource, which involves monitoring and managing security risks that infiltrate the infrastructure or hardware they own.

Your company as the buyer is responsible for security within the cloud resource. This involves being in charge of the authorization of your sensitive data within the cloud resource.

3. Payment Model

How you would pay to run your on-premises infrastructure versus your cloud-based infrastructure differs quite a bit.


With on-premises software, a licensing model is often involved.

For example, with licenses, an organization pays a flat usage fee, enabling them to share the software with as many employee members as they want during the license period.

Licensing models include:

      • Perpetual

This model applies only to particular software versions based on one-time purchases with unlimited use forever.

      • Floating

Includes a defined number of licenses that anyone within your organization case use.

      • Subscription

A periodic pricing model automatically renews at the end of a given payment period.

While several organizations have managed their payment models, these can come with specific issues such as increased up-front costs, the inability to receive security updates, and more.


In comparison, cloud resources abide by a subscription-based or usage-based pricing model.

Since we already outlined the subscription-based model above, let’s define the usage-based model. The usage-based model is determined by the number of computing resources consumed during a particular period.

While the selection of pricing models may be simpler to understand for the cloud infrastructure, there are still a few things to watch out for.

If you choose to migrate to the cloud, your business will need to account for any hidden costs added to your bill at the end of the month. This includes costs associated with unexpectedly needing to add more users or not avidly tracking your cloud usage.

Ready To Make A Decision About Your Infrastructure?

There is no such thing as a one-size-fits-all infrastructure deployment for each and every business.

While some companies may decide to migrate fully to the cloud, others may need to maintain their hybrid work environment.

Every technology decision requires research into various solutions that can streamline workflows and optimize business operations.

At LDI, we offer both on-premises and cloud-based infrastructure solutions to clients interested in changing their environment. We focus on solutions that reflect our clients’ business technology needs and goals.

To learn more about on-premises versus cloud-based solutions, it’s best to read up on how secure the cloud really is and what solutions to implement.

Read our article about the top three cloud security problems and how to solve them.

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