5 tips to tackle the cloud vs on-premise dilemma

Cloud computing, generative AI, big data analytics: These fast-moving technologies are causing rapid innovation in the way organisations handle and understand data. Cloud computing, in particular, has proven to be a big boon for firms, as by moving business-critical workloads to the cloud they can enable greater flexibility and scalability. According to Gartner, 51% of IT spending in infrastructure software, business process and system infrastructure will have moved from traditional solutions to the public cloud by 2025, up 10% compared to 2022. Furthermore, almost two-thirds of spending on application software will be directed towards cloud technologies.

Compared to on-premises computing, cloud-based technologies are often praised for helping enterprises significantly improve time and cost savings while reducing the impact on IT administration. However, there have been recent concerns surrounding the cloud, such as upfront expense, along with performance, security and regulatory compliance. The debate this has ignited amongst businesses is causing some to reevaluate their decision to move their data to the cloud. 

So just what are the key considerations when selecting whether to embrace the cloud, or bolster your on-premises solutions?

  1. What can the cloud offer you

Given the pace of technological innovation, businesses now have a plethora of options for deploying and expanding their operations. But the question of cloud versus on-prem should start with an assessment of business needs and application performance requirements. For businesses with changing or expanding bandwidth requirements, cloud-based services are typically a good fit as they offer the freedom to scale your operation.

The concept of cloud scaling is not new, but actually assessing what your business needs from a cloud solution requires more than guess work. Optimising the capacity of your cloud server to meet rising and falling demand requires ongoing performance testing and IT teams logging user requests and memory usage. Another important benefit of cloud scalability is reducing the cost of disaster recovery in the event of a breach or other incident. With a scalable cloud solution in place, there is no need to build a secondary data centre to preserve data. When appraising third party cloud providers, a key question is what capabilities they have in place to enable seamless scalability. 

  1. Flexible data for a flexible world

Recent research from KPMG indicates that 42% of executives believe that the main benefit of cloud computing is that it allows for the maintenance of a flexible workforce – a near essential requirement in the age of hybrid working, where being able to manage and retain talent from diverse geographies provides a clear advantage. Of course, being able to decentralise both the database location and the staff required to operate it can lead to huge cost efficiencies in terms of office space and subsidiary maintenance of the premises. 

However, economic uncertainty is leading many companies to adopt a more binary view of business expenditure, with spending gates being introduced to limit their expenses per quarter. As well as limiting new spending, there is also a clear scrutiny of tech stack ROI and a need for rationalisation of the tools and services to procurement teams. This outlook can dissuade some companies from properly considering cloud providers. 

  1. Save now might mean pay later

A key component of the cloud is the diverse ways in which various providers price their offerings. Some might be cheaper up-front but are more likely to incur additional costs over time, while others might seem more expensive to begin with but come with services—such as remote database administration—that can help businesses save money in the long run. When consistent revenue isn’t guaranteed and the economic landscape feels volatile, it’s natural for enterprises to tighten budgets and expect guaranteed returns before investing in new cloud solutions. Given the higher costs associated with the cloud, some businesses are moving workloads back to on-premises servers to have total control over their infrastructure and more predictability in terms of financial outgoings.

Nonetheless, given its scalability, agility, flexibility, and security, many businesses continue to use cloud computing. To ensure the best possible resource allocation in the cloud, business leaders are looking for cloud financial operations techniques to update existing budget processes. Comparing platforms can be challenging due to the vast differences in pricing structures between suppliers. But determining your company’s requirements and usage patterns is crucial.

Cloud and on-premises are both viable solutions, but the decision will depend on how well you can estimate the performance needs of various applications and keep track of workloads across the board. There are certain situations where some applications might not be a good fit for the cloud, and the same goes for on-premises. 

  1. The future in the hybrid cloud

Rather than go all-in on-premises or in the cloud, many IT leaders are opting for a hybrid cloud approach. The hybrid cloud unifies public cloud, private cloud and on-premises infrastructure to build a single, flexible, cost-optimal IT infrastructure. It serves as a means for businesses to cut costs, lower risk, and increase their current capabilities to assist efforts related to digital transformation. According to a study by Statista, the worldwide hybrid cloud market will grow from $85 billion in 2021 to an estimated $262 billion in 2027. The Asia Pacific area is anticipated to develop at the fastest rate during this time. This data hints that the adoption of hybrid cloud is anticipated to rise, with it acting as a clear middle way to access the flexibility of the cloud and preserve the security and control of an on premise infrastructure

All things considered

The choice of cloud or on-premises differs from business to business. Assessing the performance needs of various applications and keeping an eye on workloads in both settings is crucial to make the right decision. Businesses can achieve cost-efficiency as they grow—without compromising essential capabilities—by implementing financial operations practices which include conducting the necessary research, evaluating the available options, and working with the financial, development, and IT teams to select the best database solution.

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Jozef de Vries is the Chief Product Engineering Officer at EDB, the Postgres open source leaders, he joined the company in September 2020 as an SVP of product development. Prior to working for EDB, Jozef spent 16 years at IBM, working across software development and cloud database integration. Jozef is currently based in Boston, Massachusetts.

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