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IaaS - Infrastructure as a Service vs On-Premise Hosting


On-prem and on cloud... what's the difference? 
On-premise data center vs private cloud... which requires more staff?
What's the difference between private cloud and on-premise in the first place?
If you're asking questions like these, you've come to the right place.

Talk to our experts in Microsoft Azure Managed Services

How should I handle our hosting?

As more businesses adopt cloud technology, they are given the choice between private cloud hosting or on-premise hosting, or simply shortened to "cloud versus on-premise." Which is the best option between these two? What variables and criteria should a business use to determine what's best for its needs and capabilities in the on-premise vs private cloud battle?

What this article will cover 

In this article, we will discuss the advantages and disadvantages of both cloud hosting using a 3rd-party IaaS (infrastructure as a service) and on-premise hosting, and discuss the scenarios in which each could be beneficial for your business based on your particular needs.

On-premise cloud hosting explained

As its name implies, on-premise cloud hosting services allow a business to facilitate its cloud computing directly from its physical location.

The advantages here of course are that a business has full control over the data infrastructure of its cloud services on-site and does not have to rely on telecommunications for maintenance, repairs, and the like. A business has full autonomy over configurations, hardware, modifications, and other considerations for operating its cloud solutions infrastructure.

How on-premise hosting works

If the business has system administrators or other appropriate network staff, using a prescriptive deployment is the initial phase of the cloud services process.

Oftentimes, on-premise hardware providers will give architecture guides an experienced system administration and engineering group can implement. This work will typically require a very sharp ability in network logistics, server hardware, maneuvering the cloud software material itself, storage software, ongoing monitoring of the system, and so on.

Remember that you are essentially operating your own private data center, and it can be very labor-intensive and time-consuming to build an on-premise private cloud, and the cost can be very high. As a business, it will be important to determine if the nature and scope of your particular offering necessitate this kind of investment.

In very exceptional cases, it will. In other cases, usually because of prohibitive pricing and lack of experienced personnel, it’s likely not worth it. This is something you’d need to discuss in-depth with your team.

On-premise hosting considerations

If you decide to implement an on-premise private cloud, as a business you are taking the complete scope of responsibility for both costs and maintenance involved with the hardware, servers, each applicable service provider, and everything else.

You will have full autonomy over your cloud environment and cloud infrastructure, but you will also have more responsibilities. This will involve handling undesirable situations like hardware malfunctions and other applicable cyber-disaster situations that create downtime. It will be important to have full data backups in place and a redundant site for optional recovery. 

Businesses will also have to consider the many additional costs involved with things like software licenses and new hires if specialized system administrators aren’t on payroll and are required to help in-house operations. Staffing is by far one of the most crucial items to consider when comparing a hosted vs on-premise private cloud situation for your business.

Additional on-premise hosting considerations

It will also be important to have in place someone intimately familiar with budgetary items to be able to focus on items such as “Cost per VM” as well as “Cost per GB Storage.” These costs represent the general efficiency metrics of your cloud system and should involve all system costs for both cap-ex and op-ex.

Since on-premise software runs on a local network on each computer in the system, required hardware specifications must be maintained by each of those computers. This can be a complication, especially with situations involving complex network programs: finding the appropriate hardware can be significantly cost-intensive and hard to scale as user demand increases.

This also means more work for your IT staff as new hardware will constantly need to be installed and maintained over time.

On-premise cloud hosting advantages

With all of the above in consideration, the most significant advantage of on-premise cloud hosting is simply the custody of your data. Because a company’s data is held in-house on your premises, you have total autonomy over your data including your data’s security.

Critical or sensitive data is fully internal and does not have to be transmitted outside your own organization. For companies who have to work sensitively around complex compliance issues, this can be a very important advantage that outweighs the greater efforts involved in the on-premise cloud maintenance. 

Another key advantage related to having your data storage be local is that if you encounter any network delays or issues and your Internet connection is disrupted, your team can still access all of your data with internal on-premise cloud solutions and access to physical servers.

For organizations who operate on very tight schedules utilizing highly time-sensitive information, this can be an important advantage. 

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Cloud hosting using IaaS or PaaS 

Cloud software approaches that utilize the remote infrastructure as a service principle offer several advantages. The obvious first advantage is that a company doesn’t have to utilize its own hardware. As a result, the amount of physical equipment a company needs to use is much smaller.

Maintenance and upkeep for the hardware is the responsibility of the cloud company, most underlying infrastructure software updates happen automatically, and you don’t have to worry about running a team of local hardware and infrastructure staff to deal with configuration issues.

This significantly changes your company’s cost structure and diminishes the amount of work your IT team must take on by a large factor. 

IaaS cloud hosting advantages 

Because a cloud-based hosting approach requires much less maintenance and attention, it has significant financial advantages and offers much more flexibility for growth and scaling. Cloud hosting utilizes a subscription approach that combines costs into a single number presented upfront, and the aggregate costs that compose this number tend to be more even and predictable.

Scaling with this kind of cloud platform is less of a challenge, as the hosting company’s capacity is usually unlimited for most workload types, offers easy upgrades, makes an easier process management flow for your IT infrastructure, and requires a small effort to simply purchase more storage, bandwidth, and/or licenses. 

For companies with business needs that don’t require intense compliance sensitivity for data, an IaaS (Infrastructure as a Service) cloud solution can be fantastic, offer better functionality for data upgrades, and is often more cost-effective.

Employees are no longer physically required to be connected to a particular workstation that utilizes the required hardware but can simply work from a device that has an Internet connection. This provides flexibility for your computing resources and maximizes your physical workspace.

Disadvantages of 3rd-party IaaS cloud hosting

With every advantage of remote cloud servers, there are always a few disadvantages. The most obvious disadvantage to 3rd-party IaaS cloud hosting is that you lose control of what you gain in flexibility: your company is at the mercy of your cloud provider.

If prices go up, if your provider’s hardware goes down, or if your cloud provider simply discontinues its offerings, you can’t simply take matters into your own hands; you must find a different provider. This can disrupt your business operations and cause slowdowns and frustration. 

Also, when you’re depending on public cloud software hosting, you’re at the mercy of your Internet connection. If a storm hits your building and you experience a power outage, or your internet service provider has maintenance or is out of sorts for an hour or two, you can’t continue working in your cloud infrastructure

Thirdly, and perhaps most importantly, data protection is different. When utilizing cloud solutions, you must transmit data to and from your provider, and this can become risky when dealing with a provider that is based in a different country, without proper encryption protocols, or with potentially different data protection laws. 


IaaS - Infrastructure as a Service hosting puts everything in terms of responsibility for maintenance and administration regarding the infrastructure aspect of the cloud provider on the provider itself, which will ultimately be very attractive to most organizations who don’t want to be burdened with more responsibilities than necessary.

The cloud provider is responsible for managing the resources, and the organization can simply relax and utilize the deep benefits of the cloud, including things like scalability and streamlined performance.

Whether you decide to utilize on-premises hosting or go with a 3rd-party IaaS-based server completely depends on your resources, your organizational structure, your industry, and your competitors.

So, which is better? 

If you want to go with on-premise hosting, you need to make sure that you have the proper budget and personnel allocations for this type of endeavor. Many companies in the past have made the mistake of wanting to utilize on-premises hosting, but quickly find themselves underwater when they realize the significant costs involved, often costs that are not immediately apparent upfront.

Especially if they are not in industries that have strict regulations around the data, companies like this might quickly realize that the advantages of on-premise hosting don't necessarily apply to them.

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On the other side of the coin, many companies will simply benefit from the scalability, simplicity, and ease of use they experience by working with an IaaS cloud hosting service. From a budgetary standpoint, these companies will be more than grateful to oblige a simple pricing model each month that allows them to spend without worrying about hidden costs or extra fees.

They are willing to endure the occasional local Internet outage for the advantages this offers them. On-premise vs IaaS is something every emerging company needs to decide on.

Thinking the cloud is right for you? Learn more about our Microsoft Azure Managed Services offering.

Topics: Azure

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