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Comparing Cloud-based and On-Premises Servers for Business Applications
Comparing Cloud-based and On-Premises Servers for Business Applications
Gonçalo Fortes avatar
Written by Gonçalo Fortes
Updated over a week ago

The goal of technological advancement is to make business operations easier, faster, and more productive. While these are the core requirements, other considerations such as cost, flexibility, and security are also factored in. When it comes to choosing the IT solution for your business, it is extremely important to carry out assiduous research on the available technology.

Two widely adopted server systems currently in use are cloud-based & on-premises servers. Although they basically serve the same purpose, the major difference is in how data is stored. When you consider implementing an Enterprise Resource Planning (ERP) system for your organization, an important decision must be made: Cloud-based or On-Premises servers, which technology should I adopt?

Here’s a brief overview of both server systems. This should launch us into a deep study of the underlying technology, helping us reach a more informed conclusion without stress.

Cloud-Based Servers

In cloud computing, all programs, data, programs are stored over the internet. This offers a lot of flexibility regarding control, management, and monitoring of operations. Cloud storage ensures that your intellectual property is easily accessible to you. Also, extra layers of security can be installed, fending off hackers and other criminals.

On-Premises Servers

On-premises software is installed locally, on your in-house computers and servers. You have access to the data, hardware, and software licenses - this ensures that what’s going on internally stays inside. Although one might think that the remote location of this server will ensure real-time access, however, this is not the case. There are other factors we shall consider.

Which is better?

This is the million dollar question. The answer promises to income which can even exceed that figure. Let’s critically analyze the pros and cons as this will help us come to a reasonable conclusion.


In theory, an in-house data center might look more secure, but in reality, this isn’t true. Why?

It has been reported that the majority of security breaches can be traced back to employees. On-premises software solutions are much easier to breach, provided that an employee is behind it. The bad news: This can go on for a long time with nobody noticing.

On the other hand, cloud computing is very difficult to breach. And the good news: Even if security is breached, the cloud service provider will immediately inform their customers about it.


In today’s world, high data-processing speed is a necessity for survival. Using on-premises software, in order to keep up to speed, adequate maintenance must be carried out routinely - if you fail to do so, then you’re sure to experience a delay in business operations. Longer waiting time is also unavoidable when configuring the system to allow third-party access. However, with cloud computing, disruptions are a rarity and even if they do occur, recovery is super-fast.

How about Ownership Costs?

Using on-premises servers requires a high capital cost for the purchase of the equipment required. Furthermore, it is costly because you need an experienced IT staff to run it for maintenance and necessary upgrades as time goes on.

On the other hand, a Cloud server is based on a pay-as-you-go subscription model. This is the only cost you incur together with the cost of accessing the internet.

Flexibility on Expansion

Most businesses definitely want to scale. Using cloud servers, all you have to do is change your subscription model to account for more users. However, with On-premises servers, you need to build new infrastructures and employ more IT staff to match up to the growth - a very rigid and exhaustive process.

Bringing it all Together

Like all things, any solution will have advantages and limitations. The decision is usually made for the option with more upsides than downsides.

As we have examined, generally speaking, cloud servers are superior as the benefits they offer significantly outweigh the risks.

To conclude this article two things are noteworthy:

  1. Cloud computing is generally superior, however, you can try to integrate both cloud-based servers and on-premises servers.

  2. If Cloud computing is to be adopted, it is important to analyze the goals and expansion plan. You should also consider the budget your business can afford at that time.

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