Should Your Business’ IT be On-Premise or in the Cloud?

A good IT system should ideally work away in the background and be fairly innocuous, causing no issues and enabling staff to get their jobs done as quickly and easily as possible.
The decision on whether on not to use an on-premise or cloud solution will be affected by things such as your internet speed, your attitude to remote working, your existing uptake on cloud based products (such as Microsoft 365) and your future plans as a business.
Oh, and of course how much it’s going to cost you, but we’ll come to that shortly…

Benefits of Cloud IT

The benefits of Cloud IT are fairly straight forward, but before we get into them it’s important to understand what a Cloud solution is and why it works differently.

The easiest way to think of cloud IT is basically to imagine all of your software and data stored on someone else’s server in a server room, someone in the world. All that data and your applications are then accessed via a secure internet connection, most commonly through an Internet browser, VPN or Remote Desktop Connection.

If that seems strange, then it may seem more normal when you consider that most of the leading software providers in the world deliver their services via the Cloud – Facebook, Google Gmail and Dropbox for example.

With all of your core IT infrastructure based in the cloud you limit your on-premise equipment to the absolute minimum, typically just PCs or laptops, phone handsets and some basic internet routing and WiFi equipment. This not only reduces the risk of any physical equipment failing at your offices, but makes support, upgrades and maintenance of your core IT equipment much easier.

Cloud IT also allow you and your staff to connect to your network from anywhere with an internet connection, making remote and home working easy, even if you have people who switch between working from the office and working elsewhere.

A Cloud IT solution also gives your business a benefit from a business continuity point of view. If for any reason you can’t work from your office (power cut, internet failure, flood, fire, global pandemic etc.) then your staff can simply head home, or to anywhere with an internet connection, connect to your system and carry on working.

Benefits of On-Premise

An on-premise IT solution is the type of solution that most businesses will be familiar with. It involves the vast majority of your IT network equipment being hosted in your own premises, normally in a server room, with staff connecting directly to the servers through cables that run through your building.

Many businesses have favoured this approach over the cloud as they like to be able to “see” their data and their equipment and also be able to pay for it as a capital expenditure, rather than paying for what has been considered a “service” historically when it comes to Cloud IT.

On-premise solutions are a lot less reliant on internet connectivity and unless specific applications need to be online, your systems will carry on working regardless of your connection status or speed.

When buying IT equipment such as servers, it’s normal for them to have approximately a 5 year life span at which point they are generally considered paid for and any additional years that are eked out of them are a bonus, compared to a cloud solution which is paid for each and every year it’s in use.

Key Differences

Whilst ultimately looking to achieve the same thing, there are some key differences between the two solutions.

Firstly, flexibility is much more significant when it comes to a cloud solution, allowing people to easily work from remote location if required.

Business continuity is also improved through cloud IT, with that same ability to work from home available whenever it’s needed.

In terms of owning physical equipment, on-premise solutions are favoured here especially when you can “see” what you’ve bought, although options to buy equipment of your own and still utilise the cloud are available.

Finally, it’s a question of what’s going to happen in the future. At The HBP Group we support a wide range of on-premise, cloud and hybrid (a combination of the two) solutions and for years have remained fairly agnostic about the choice. However, the world is changing and Cloud IT solutions are seriously worth considering today, especially if you have plans to grow your business and have a future proofed IT network.

Which one is the cheapest?

This is a tough one to answer – but the difference between the two is minimal when you consider the long term costs of both systems.

Cloud IT solutions are normally wrapped up in monthly payments covering everything from hosting charges, support and any installation services which are needed at the outset. Unless there are any changes in the system, these costs will be predictable and consistent each and every year.

On-Premise solutions start with an initial investment to buy equipment and installation services, but following that there’s only maintenance and support to pay for each year. If this is spread out over a 5 year period via a lease, which it often is, then the cost can appear lower than a Cloud IT solution.

However, the hidden costs of an on-premise system includes your electricity costs, any cooling costs related to your server room and of course, the space of the server room itself. The most significant cost comes after around 5 years though, when severs normally need replacing and the initial investment of equipment and installation rears it’s head again.

In our calculations looking at a 5 year plan (i.e. no on-premise equipment refresh) then on-premise always comes out cheaper for a like-for-like solution, but when that period is extended to over 5 years then Cloud is the most cost effective option.

If you’d like to talk to our team about what solution is best for your business contact us or apply for our Free IT Strategy review below.