On Premise vs. Cloud – or a Hybrid Model After All?


Should we run the necessary software on our local infrastructure or possibly use a cloud provider after all?” This is a question that companies ask time and time again when it comes to weighing up the required time, monetary costs, and data protection, among other things. Chances are that you’re asking yourself this question as well, which is why you clicked on this article. The ‘cloudhas become increasingly popular over the years because it can greatly simplify the use of software – but it also has some drawbacks. In this article, I will address the question of On Premise vs. Cloud and discuss the concept of a hybrid system. 


On Premise vs. Cloud

The fundamental difference between On Premise and Cloud software is essentially the hardware on which it is installed. On Premise software exists on the company’s computers and servers, while cloud software is available on the server of the respective provider and is usually accessible via a web browser. However, there are a considerable number of other issues that need to be considered when deciding where to install software. These include cost, updates, invested effort, support, as well as security. Let me highlight the advantages and disadvantages of each solution.


On Premise Software

One of the biggest advantages of On Premise software is that the ownership of the program never expires, and it can be used indefinitely. But is it only a one-time cost? Not necessarily: Companies usually work with licenses that may have to be purchased for each individual employee. In addition, some licenses must be renewed after a certain period of time. This means that the software is owned for at least a certain period, but it may not be cheap after all.  

Probably the most obvious advantage is that the data is stored locally on the user’s machine or the company’s server. Thus, the data is not sent to a server in an external data center and backed up there. Additionally, you have complete control over this data and can decide for yourself how exactly to proceed with the software. Customizability is easier as well when you have the software installed on your local hardware.  

Certainly, software needs to be updated on a regular basis so that the program’s functions can be expanded, and so that its stability or security can be improved. This leads to additional work, especially if the software is stored on local servers, as the company must perform any updates without external aid. Especially in larger companies, this can lead to a considerable amount of work. Also, there is usually only limited support for On Premise software – it may even be discontinued after a certain period.  

It must also be mentioned that the users’ computers must be powerful enough to use the programs, since the software exists on them – this can also lead to higher costs. For this reason, the energy costs may be higher as well.


There are no ongoing costs associated with owning the program. High initial costs
Control over Data Licenses can be costly overall
High Customizability Potentially high effort due to updates of the software
Data protection of sensitive data can be ensured. Limited Support
Powerful PCs needed
Possibly higher energy costs


Cloud Software

In general, Cloud Software is a lot easier to maintain: As part of Software as a Service (SaaS), companies can opt for a subscription to the software instead of buying individual licenses and installing the software on local computers. Financially, this means that the company pays on a monthly or annual basis to be able to use the software. This can result in higher overall costs in the long run, but the one-time purchase at the beginning is lower. It should also be mentioned that this model makes it easier to switch to another program or add other accounts.  

Since the software is not located on local computers but on central outsourced servers of the cloud provider, the user’s devices do not need to be capable of high performance, since all the computing power takes place in the provider’s data center. However, the devices must have a good and stable Internet connection, otherwise the users will not be able to work with the software. In addition, the energy costs may be lower because the software runs on the external cloud.  

In addition, the cloud model also offers other advantages: For example, less work is needed on the part of the company, since the software is updated by experts without the user having to take care of that themselves. The hardware is also supported by these experts – another aspect that greatly reduces the workload for the company. However, this also means that as a company you can make fewer changes to the software yourself.  

On the other hand, trust in the cloud provider is necessary since the data is no longer located locally with the company. Instead, this sensitive and internal company data is stored in the provider’s data centers. In addition, surrendering control of the software leads to another potential problem: If the provider decides to discontinue or pause the service, this can have an extremely disadvantageous effect on the use of the program. 


Low initial costs Dependence on stable internet connection
No need for powerful devices Reduced customizability of the software
More accounts can easily be added Regarding data protection, a certain level of trust towards the cloud provider is necessary.
Easy switch to another program Risk that the software will be paused or discontinued
Minimal maintenance requirements
Possibly lower energy costs


How Does a Hybrid Solution work? 

The topic of On Premise vs. Cloud is less black and white than it might seem at first. Even though the models mentioned above are extremely valid options and cover many scenarios, there is another way: the Hybrid Solution.  

As the name suggests, this is a solution that makes use of both concepts. One of the most important reasons is quite simple: Not all data belongs in a public cloud but having only an On Premise system may not be workable for several reasons. Reasons for a Hybrid Solution can include a gradual move to the cloud, a combination of the benefits of both worlds, and greater flexibility.  

Such a Hybrid Solution connects all your data together: This includes the data in your local data center, where business-critical applications and sensitive data reside, as well as resources in the public cloud, where data security plays a marginal role. Even though all this data is connected through the hybrid approach, it remains separate. Providers such as Amazon Web Services or Microsoft Azure offer such hybrid approaches. 


Hybrid System
An example of how a company can use a hybrid system to its advantage.


In summary, there is not that one perfect solution for running your software – it depends on your exact goals and which approach works best for your business.  


Are you still interested in this topic and would like a consultant to work with you? Then feel free to contact us! 


Weitere Artikel

Checked and Tested: We Have 14 New CDC Experts
IAM For Banks: Why Do I Need It?