On-premise vs cloud servers: the advantages and disadvantages

  • 13 January 2022
  • Reading time: 9 min
  • Hosting

Many company managers prefer to keep their data as close as possible. So they go for on-premise (local) servers, safely tucked away in a server room. But is it really safe? Not always...

A responsible business manager is not going to keep his capital in a box under his bed (hopefully). So why would you do the same with your servers? In this article, we will compare the practice of keeping servers on the premises and the use of external hosting (also known as a 'cloud solution').

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On-premise server: working locally

It was once common practice for companies to invest in local, on-premise servers. With such servers, your data are managed and stored locally, and you can access them from your organisation's internal network – or through a VPN that you can use to log in to your internal network.

Of course, there are advantages to keeping your server locally, but for the majority of companies these do not outweigh the disadvantages. Nevertheless, we would like to list the advantages and disadvantages of both options!


Independent of your Internet connection
If you want to access your files within the walls of your office, you can always reach your own servers via your local network. A slow connection will therefore not affect the smooth running of your business. As long as you are on the local network.
When all your collaborators work locally, you can work faster. Even if you have a (normal) good Internet connection, a local network will always be faster. This is especially handy when you work with large files. Just think of TV production companies that edit shows with footage on a server.
You can manage your server all by yourself. This means that you can make adjustments, experiment or scale up as you please, whenever you want. But of course, this requires staff, knowledge and time.


Physical space
You have to install your server hardware somewhere – and preferably not under the coffee machine 😉. Not every office is prepared for this.
The measures required to ensure optimum security in a server room are many and varied. Just think of fire safety, backup power, cooling, access control or intrusion prevention. Those things can quickly add up to a pretty penny.

Managing a server in-house does give you full control, but you are of course also responsible for updates and server security. And that is often a labour-intensive process, for which you need staff and extensive expertise!

When your business grows, you will soon run out of space on your current servers. You can scale up, but this requires some effort: you have to order the servers, and then configure them – and you also have to hope that there is enough space available in your server room.
Redundancy is expensive
When you work with redundant servers, which means that you can switch to another server when something is wrong with one of them, you have to pay a lot of money. Although that is very important for your business continuity.
The chances that you will use your local server(s) to its full capacity are rather slim. This means that part of your server is always using energy unnecessarily. And that is not really cost-effective.
Backup strategy
If you do not back up your data to an offsite location, you will face a major problem in the event of a hack or a disaster (such as a fire or a flood). Fortunately, this can be remedied by connecting any local server to the cloud using Veeam software.
Disaster Recovery is non-existent
An external backup (such as with Veeam Cloud Connect) is important to not lose your data, but it doesn't mean you can get back to work quickly in the event of a disaster. Because if your local server becomes unusable (due to a disaster, flood or hack), you no longer have any infrastructure to work on, and everything is down!

And we probably don't have to tell you that a new server not only entails an unexpectedly large cost, but that the delivery times are also high. Ordering a new server can take up to months. And then the installation, configuration and restoring of (large) backups still have to be done!

Let's face it, a foolproof Disaster Recovery Plan requires the cloud: this is how you quickly switch to another server in the cloud, if there are problems with your current server.

Not ideal for teleworking
With the growing number of teleworkers, it does not really matter anymore where your data are stored: people working from home will always need the Internet to access your data. Moreover, if you keep your data locally in your office, that connection will probably be slower than if you use a server in a highly available data centre.


Nothing in life is free: your own server is a hefty investment, especially when you factor in all the security measures you need to take for your server room.

And that investment must be made all at once, right before you start using your server. When you have just started your business, this can put a strain on your cash flow, and you may not even have the capital you need to make this investment.

You may also know these one-off costs as CAPEX (Capital Expenditure). This CAPEX is in addition to your Operating Expenditure (OPEX), i.e. the costs you incur to keep your on-premise server up and running.

The one-off investment does, however, ensure that your monthly costs (or OPEX) remain fairly low. These monthly costs consist mainly of your energy bill and the salary of your system administrator. But do not forget that your server needs maintenance and that repairs are also a costly affair!

Comparison with the costs of owning a car

Car owners often forget to include all the costs when they budget. What if there is a crack in the window, or if a warning light starts flashing on your dashboard and you have to take the vehicle to a mechanic? These costs are inherent to owning a car, but they are often overlooked.

An easy solution to prevent those unforeseen costs on your car? Lease a car! Your leasing company is responsible for maintenance and (most) unexpected costs. A cloud provider can therefore be compared to a leasing company: You pay a fixed amount for your use of your server in the cloud, and when that server has 'an asterisk in the windscreen', your cloud provider is responsible for those costs.

Who uses on-premise servers?

For most companies, on-premise servers are a thing of the past, but organisations with business processes that require a lot of data (such as TV networks or graphic design agencies) are best off using a local server – or at least for the part of their operation that requires a lot of bandwidth.

Even if you have the technical expertise in-house (i.e. staff with the knowledge to manage your server), it is still preferable to have an on-premise solution. This means that you yourself are responsible for the management and security of your hardware, but also of your software (including, for example, the installation of new (security) software). In doing so, you should obviously not lose sight of the extra costs associated with that staff!


Cloud computing: remote servers

Cloud computing means that you work with external servers operated by a cloud provider. You use (part of) a collection of servers to store your data and backups. Such a server can also be called 'infrastructure as-a-service', considering that you rent your infrastructure from a cloud provider and pay a fixed price for its use and maintenance.

Different forms of cloud computing are possible: you can either go for your own private cloud, which means that you use a completely isolated cloud environment, or you can use a public cloud, in which case you share the infrastructure with other cloud users.

The advantages of the cloud

Security is the biggest advantage of a cloud server. When you call on a professional hosting company, you can be sure that your data will be kept fully secure.
Predictability of costs
You pay a fixed monthly fee, and do not have to make a large investment. Repairs and maintenance are included. Of course, your costs will increase when you need more capacity, but definitely not as much as when you own your own server.
With the cloud, you use (part of) a collection of servers, whose resources are used optimally. The servers in this collection are interconnected, and users are given their own 'virtual cloud server' on them. Needless to say, all this is done with the greatest attention to the security of your data.
You do not have to lie awake worrying about updates or maintenance: a good hosting provider takes care of everything at the right time. So you can be sure that your server will always deliver the best possible performance.
If your business grows, your server grows with it, and there is no time wasted waiting or setting everything up. Would you rather scale down a little? Your server is fully scalable. And it can even scale up or down automatically!
Your cloud host will do its utmost to ensure that you can access your data with minimum downtime. And that you can reach your servers wherever you are!

The disadvantages of the cloud

When you choose providers based in the United States, your data are not necessarily well protected from prying eyes. The Patriot Act allows the government to access data from servers located on US territory in the event of 'suspicion of criminal activity'. And with the passage of the CLOUD Act, it is no longer necessary for servers to be located on American soil: servers owned by American companies but operated on European territory may also be accessed in certain cases.
Time and thought
Moving to the cloud takes some time and thought in order to ensure a flawless migration. Of course, a cloud provider such as Combell can guide you in this process.
Depending on your Internet connection
When you want to access your data, you are dependent on your Internet connection. Fortunately, this can be remedied with dedicated connectivity. With this solution, you can be very confident that your business processes in the cloud will always run smoothly.
Not ideal for teleworking
With the growing number of teleworkers, it does not really matter anymore where your data are stored: people working from home will always need the Internet to access your data. Moreover, if you keep your data locally in your office, that connection will probably be slower than if you use a server in a highly available data centre.

The costs associated with the cloud

Every business has its own needs: while your company may only need limited computing power in the cloud, other companies rely on the cloud to keep very demanding applications running smoothly. That is why a precise cost estimate depends on your business processes.

However, just as with the costs of on-premise servers, it is useful to mention CAPEX and OPEX here. Your CAPEX (Capital Expenditure) will drop significantly, as you will not have any startup costs or need to invest in hardware (unless, of course, you go for a direct connection to the data centre with dedicated connectivity).

So your costs consist (almost) exclusively of OPEX, i.e. operating expenses. These are very predictable, because your cloud provider is responsible for maintenance, updates and expertise. You no longer need to employ staff to keep your server up and running: providers do that for you.

The costs associated with growth or downsizing also fall sharply, as you do not need to purchase a whole new server infrastructure, but simply call on your cloud provider, which will provide additional capacity almost instantly. One thing is for sure, your wallet will thank you!

Who uses cloud servers?

For most businesses, a cloud solution (i.e. having a cloud provider maintain your hosting) is the best bet.

Today, many companies have implemented a teleworking policy. In this context, having your data accessible from anywhere is a big advantage, making a server in a highly available data centre an ideal solution.

Companies with several branches also like to make use of external servers. This way, the central server where your data are stored can be accessed from anywhere.

In other words, there are many reasons to move to the cloud. For your company too!


Your server with Combell? You can always rest easy!

A reliable hosting partner is essential if you want to take the first step towards moving your servers to the cloud. Combell will be happy to assist you in this migration process. We can help you find the right solution and make sure it is implemented properly. By taking the plunge, you can be sure that your server will have enough computing power to allow your business to run smoothly.

Combell always puts three things first when it comes to your IT services: security, performance and speed. This means that you never have to lose any sleep over your security, and that the storage and use of your files is fast and flawless.

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