On-prem vs. cloud deployment models: Which option is best?

March 02 2023

Is an on-premises or cloud infrastructure better for your business? It depends. Here’s how to make an informed decision.

In the world of technology, there is often a tendency to fall into the trap of “shiny object syndrome” — when we assume newer must mean better. But if that’s the case for cloud environments, could it spell the end of on-premises infrastructures?

Cloud computing adoption has become synonymous with modernizing IT infrastructures. With big names like Amazon, Microsoft and Google tied to the industry, jumping ship and abandoning the traditional on-prem deployment model is tempting.

But while there are benefits to be gleaned from a cloud-based model, it isn’t necessarily the best solution for every company.

So, how do you decide what approach is best for your business?

In this article, we’ll dive into the pros and cons of both on-premises and cloud deployment models so that you can make an informed decision about which option is right for you.

Cloud vs. on-prem: What are the pros and cons?

The primary difference between cloud and on-prem solutions is where they reside. An on-prem infrastructure is managed and maintained locally on your company’s computers and servers. In contrast, cloud solutions reside on a vendor’s servers and are accessible online.

This difference leads to a slew of strengths and weaknesses for both approaches. To determine which is best for their organization, tech teams and business leaders must weigh several factors, including cost, security, control and scalability.

Here’s how on-prem and cloud-hosted solutions stack up against each other in these critical areas:


Almost all decision-making processes involve financial considerations, including choosing between cloud and on-prem deployment models. But there’s no clear winner between the two. Cost-effectiveness depends on the nature and size of your business.

Cloud-based solutions seem more economical at first glance. No upfront fees; you only pay as you go. Users can scale their subscriptions up or down with tier-based pricing as their business needs change. Equipment, configuration, maintenance and licensing costs are baked right into subscription costs.

On-prem solutions, on the other hand, cost a lot to deploy and maintain. In addition to capital expenditures — like hardware, software and licensing — your organization is subject to ongoing personnel and utility costs. But medium to large businesses often have the resources to cover these expenses, saving them money in the long run.

Costs for hyperscale cloud providers (Amazon AWS, Microsoft Azure, and Google Cloud) are steadily rising. New functions and services being offered are beneficial, but they’re leading to higher expenditures than anticipated. Companies requiring heavy workloads and advanced capabilities can quickly rack up thousands in monthly fees.

Choosing a cloud provider may be a smaller company’s best bet. But for a growing enterprise with sprawling data estates, these exorbitant expenses may be better spent on servers and updates. Depreciation can also be written off as an expense when you update your systems, so your investments won’t be at a loss.

Security and compliance

Every organization values its data, and safeguarding it is a major requirement. Typically, cloud-based SaaS services are powered by reputable providers, which extend their industry-standard privacy and security measures to the apps they host. Then, there’s the shared responsibility model, with each party expected to identify, monitor and manage its assets, processes and functions. This setup results in a lower operational overhead.

An organization may also use external vendors to manage and secure its systems. In that case, compliance and data integrity fall under the vendor’s responsibility.

Opting for on-prem services allows organizations to retain complete control over security and ensure compliance with privacy laws. With the right IT and cybersecurity team, this can play to your advantage. Conversely, you may be vulnerable to attacks if you don’t have professionals handling your system. Proactive measures must be taken to ensure you can provide your organization with robust security, backup and disaster recovery.

An on-prem approach also allows you to rest assured your data stays in your backyard. Banking, insurance and other highly-regulated industries can distinguish their services this way. Cisco AppDynamics understands these business needs and is working to meet them by implementing new features and engineering new solutions for the on-prem environment.


Like security, there are two sides when it comes to control. Cloud computing gives you access to experts who can update and optimize your system. But entrusting your provider with this responsibility also means handing over access to your data and encryption keys.

Cloud service providers (CSPs) — like Amazon AWS, Microsoft Azure and Google Cloud — protect against potential issues like power outages and poor internet connections. But the fact remains: If their system goes down, so will your access to your organization’s most valuable assets.

Data ownership and vendor lock-in are the current bone of contention between companies and CSPs. You’re at risk of losing your data for good if the provider discontinues certain services your business is subscribed to or goes out of business.

In an on-prem environment, your organization controls all hardware, software and data generated. Specific industries prefer this setup because they have complete data visibility and can keep their exposure minimal.

At the same time, they can customize their infrastructure based on their organization’s current demands and priorities. Since it’s been around longer, this infrastructure configuration allows easy customization due to the


Growth is the goal of all tech organizations, so your choice of infrastructure should enable that. Both cloud and on-prem solutions support this objective, but cloud solutions are more flexible. Your resource usage will depend on your plan. The provider’s pooled resources also ensure access to a wide range of capabilities. If you need more, you can always opt for a higher plan or purchase add-ons.

In an on-premises model, your organization can scale the solution itself. But the process will take longer and cost more to implement. Monitoring and managing platform growth and adding infrastructure as needed requires experienced people and the appropriate tools.

Choosing the right model for your business

So, is newer always better? Like many questions in business, there is no one right answer when choosing between on-prem and cloud deployment models. The right approach for your business will depend on your organization’s size, needs and resources.

Both models are beneficial in some ways and disadvantageous in others, so your job is to determine what each solution offers and how it will affect your business in the long run. But no matter what you choose, Cisco AppDynamics can help you achieve full-stack observability. Whether your applications are hosted on-prem, in the cloud or both, Cisco AppDynamics can provide you with end-to-end visibility across your entire application landscape.

Observe what matters.
No matter how your applications are hosted — on-prem, in the cloud or in a hybrid environment — the journey to full-stack observability begins with Cisco AppDynamics. Connect with us to learn more.

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