Expert Blog: On-Premise vs Cloud - Pros And Cons + Key Differences

Jessica Day - Senior Director, Marketing Strategy, Dialpad

Cloud computing is one of the most significant developments in tech of the last decade. Current projections show that the cloud computing market is expected to grow at a rate of 17.5% a year, reaching an estimated $832 billion by 2025.

Proponents argue that it keeps businesses and people connected by making important services available on-demand. However, critics will point out the model’s drawbacks in comparison to its predecessor: on-premise services.

Wondering whether cloud computing is worth all the hype? Well, this article will compare the basics of on-premise vs off-premise solutions, so that you may decide which is best for your organization.

What is On-Premise?

Prior to cloud computing, businesses had to set up all the underlying infrastructure for their digital needs. That meant installing physical server rooms at company HQs to host their website and applications.

On-premise solutions have long been seen as costly and complicated. For example, they require a large team of IT staff to maintain even once they have been set up. Consequently, businesses looking to create an online presence were generally either very specialized (e.g. tech companies) or very large (e.g. FTSE 500 companies).

What is Off-Premise (Cloud Computing)?

The advent of cloud computing began in the mid-2000s when the likes of Google and Amazon started offering to-hire web services from their large data centers. Now, organizations could pay a ‘subscription’ to use an external company’s servers. By having the infrastructure set up for them, businesses could instead focus on on-site aspects like SEO and conversion funnels.

Over time, more and more companies started to offer external solutions for a wide range of niches. This developed into the Sales-as-a-Service (SaaS) industry, which meant that businesses no longer had to set up in-house digital infrastructure. These days, startup companies have an expansive set of subscription services available to them in just a few clicks.

How do On-Premise and Off-Premise Solutions Compare?

By now you should have a good idea of what on-premise and off-premise mean. You might be wondering how these two models stack up in 2022? This next section will compare some of the most important aspects so you can decide for yourself.

Upfront Cost

The upfront cost for creating an on-premise solution will usually be very high. That’s because you need to purchase and install all of the relevant IT infrastructures yourself. For this reason, businesses typically see these solutions as an investment that will serve their needs over several years.

Rather, the beauty of SaaS cloud computing is that the upfront cost is comparatively very little. Users will only have to pay for the first month of a subscription to get a taste of what it has to offer. And what’s more, many services offer a discount to entice undecided customers into trying them out.

Time to Implement

On-premise IT solutions often take a long time to become operational. Not only must you wait for the equipment to be delivered, but you must also train or hire specialist staff to configure it correctly.

On the contrary, with cloud computing, the service is already up-and-running prior to you paying for it. That means that as soon as you begin your subscription, you’ll be able to download and install the relevant apps to get started almost immediately.

Scalability

When it comes to scalability, cloud services offer unparalleled flexibility for growth. For example, a cloud-based communications solution may allow your organization to handle hundreds of calls via a power dialer system. If you find that is not enough, you can simply upgrade your plan and be running at a higher capacity by the end of the day.

To follow this example, you wouldn’t have this flexibility with a traditional on-premise telephony system. That’s because the physical limitations of your infrastructure would soon limit your organization. Sure, you may choose to upgrade it, but that takes yet more time and capital expenditure.

Security

Cyber security is an increasingly important aspect of the digital world. In fact, research by Accenture (PDF opens in new window) shows us that businesses suffered a 31% increase in cyber attacks from 2020 to 2021.

So which model offers you and your customers better protection against these attacks? Sadly for team cloud computing, on-premise solutions are hands down the more secure option of the two.

In simple terms, on-premise means that your IT staff have direct access to, and control over, your data. There’s no need to rely on an external cloud server that may be vulnerable to breach and data loss. However, bear in mind that an on-premise system is only as secure as you make it. Thus, you must accept the burden of maintenance to run it safely and properly.

For those who wish to go down the cloud route, you should check local regulations on data protection to ensure you are legally compliant. To sweeten the deal, you will usually at least have access to some kind of data recovery plan if things go unexpectedly wrong.

Still worried about the diminished security of cloud-based solutions? Well, it’s worth noting that many services now operate on a ‘private cloud’ model. Under this setup, your proprietary data is stored on a cloud server separate from the service’s other clients. You may consider implementing a private cloud system along with additional security steps such as apps like DocuSign to protect your customers’ data.

Efficiency

On-premise solutions can also offer an edge when it comes to organizational efficiency. Take for example the low latency of devices on a local network, allowing for speedy transfers of data.

Another positive is that you will never have to rely on the smooth operation of external partners for your apps to run. If your cloud services were to experience an outage, you would have to wait until the issue was resolved on their end to get back online. That could mean many hours of frustration and lost productivity.

Customization

Typically, on-premise solutions offer more freedom for customization. Rather than following the cookie-cutter approach of cloud services, on-premise solutions are made bespoke for the specific needs of the organization.

That does not mean to say that cloud solutions are burdened by a lack of creative options. You will surely find a cloud service that meets the particular niche of your organization’s needs. For example, you might be tempted by features such as a visual voicemail app that transcribes voice messages into readable text.

Conclusion

To conclude, there are compelling arguments for either side in the on-premise vs cloud debate. To answer the question of which one is right for you largely depends on the particular needs of your organization. Large, established firms may still favor the reliability, security, and customization options associated with on-premise solutions.

On the other hand, most startup businesses would value the low upfront cost and fast time to implement as particularly important selling points of the cloud service model.

Author: Jessica Day - Senior Director, Marketing Strategy, Dialpad

Jessica Day is the Senior Director for Marketing Strategy at Dialpad, a modern multi-channel call center that takes every kind of conversation to the next level—turning conversations into opportunities. Jessica is an expert in collaborating with multifunctional teams to execute and optimize marketing efforts, for both company and client campaigns. Jessica Day also published articles for domains such as Recruit CRM and Unstack Inc.