Deciding the kind of IT infrastructure for any business has become an important and consequential decision-making point. It can have far-reaching consequences on the company financials.
Let’s start by understanding the ways in which servers can be deployed in an infrastructure.
This is the oldest kind of IT infrastructure and most companies were on this up until about 10 years ago. In this, the business creates its own data centre and hosts all applications on it.
The benefit of such a setup is that everything is controlled by the business itself. So, having their own custom infrastructure is really easy.
This kind of setup falls on the other end of the spectrum. All the servers and computing resources are leased out from another company that has a huge IT infrastructure in place.
This allows businesses to quickly scale up when they need additional resources to handle excess traffic and quickly scale down when the traffic is low.
On-Prem vs Cloud
Let us look at our options from 4 major aspects:
Cost of Ownership
On-premise setup requires a high level of initial Capital expenditure. You need to lease out space to keep the servers, buy expensive hardware, hire engineers to set up the infrastructure and then buy licenses for software to run on top of these servers.
Cloud setup on the other hand is low on Capital expenditure. All you need is an account with a cloud service provider. But in a cloud setup, as you are paying for the computing resources you lease from the provider, the operational expenses can be much higher.
For a new-age startup, a cloud setup can be a better proposition. With no high upfront CapEx, they can better utilise the money for other purposes and improve their bottom line. This is true even for established traditional businesses that do not have high tech expertise. A cloud setup with a few engineers will get their job done, in most cases.
But for an established tech company, an on-premise setup can give them a lower Total Cost of Ownership in the long term.
On-premise setup requires regular maintenance and system upgrades to reliably work 24×7. All responsibilities like maintaining regular backups, updating systems and having disaster recovery measures are on the business itself.
With cloud setups, on the other hand, the businesses are outsourcing this responsibility to subject matter experts of that field. In fact, every agreement with a cloud service provider has an SLA to maintain very high uptime.
Apart from this, on-prem setups have longer implementation cycles than cloud setups. This happens as most on-premise setups will have much smaller teams and often more complex setups than a cloud setup.
In summary, cloud setups often end up being more reliable than traditional on-prem setups, since they are in the business of having the most up-to-date infrastructure.
When it comes to overall IT security, Cloud systems often have an advantage. Most state-of-the-art security systems would be too expensive for an individual business to install on their on-premise data centres. But for Cloud services providers, it is just a business expenditure that brings more revenue.
However, on the topic of Data security, the balance shifts in favour of on-premise setups. Irrespective of how secure a cloud setup is, everything is hackable. So, having a localised, on-premise data centre gives an extra layer of control and comfort on sensitive data.
Many fast-growing organisations need the flexibility of scaling up fast. Netflix for eg., may see a surge in demand during holiday seasons. Some of these demand surges can be unpredicatable. For eg., An unexpected hit show, like Squid Game, took up 24 times more bandwidth in South Korea than normal. 
For such immediate surges, you need to either have a lot of idle resources in your on-premise setup or have a cloud account that leases out the computing resources to you for that brief period of time. The cloud option is definitely more economical and practical.
A middle ground – Hybrid setups, Private clouds.
By now, it is clear that there is no solution that fits all scenarios. Every business case will demand a different kind of infrastructure. Many companies end up a mix somewhere in between the two extremes.
In Hybrid cloud environments, business applications that have sensitive data are kept on-premise while applications that can have highly varied demands are kept on Cloud.
In some cases, businesses opt for a private cloud setup where a cloud service provider sets up a private data centre and handles its operation for the business. This takes care of the data security issues that other cloud setups have.
In the end, choosing the right IT infrastructure is a crucial decision that every business must take. Hiring an IT consulting firm is a sensible idea for such consequential steps.
We at XpertLadr specialise in Cloud technologies. Feel free to get in touch with us if you have any questions in this area.