Cloud vs On-Premise: Which Is Better for Your Business?


Pros and Cons of Hosting Solutions for SMBs and Enterprises

Cloud and on-premise hosting solutions have their risks and benefits for eCommerce


CloudThe cloud, sometimes conflated with SaaS or Software as a Service, is all the rage these days, with more and more companies replacing on-premise hosting services with cloud-hosted applications. Solutions for CRM, ERP, collaboration, and more are now available through the cloud, yet some companies still prefer on-premise software and storage. Cloud storage has been under a great deal of scrutiny lately, leading some companies to wonder whether the hype is worth the risks of security breach or lost data. Ultimately, the choice between cloud and on-premise comes down to carefully considering your company's size, finances, and specific needs.

To dispel common myths and help you in your decision-making process, we’ve compiled the top five considerations for choosing between cloud and on-premise hosting.


1) Security: Complete Control, or Third-Party Support?

For eCommerce in particular, protecting customers’ sensitive payment information and purchase history must be a top priority. According to a 2013 IDG Enteprise study on the future of cloud computing, security is the top reason that companies choose to switch back to on-premise hosting after moving to the cloud. Many businesses are not comfortable knowing that a third-party has access to their data, and stories about cloud security breaches have been particularly rampant in the news these days. Because documents and files can be accessed from anywhere through the cloud, many assume that there are increased opportunities for hackers or disgruntled employees to access information.

However, while studies show that attacks on cloud-based applications are on the rise, the number of attacks is roughly no higher than on-premise security breach attempts. The effectiveness of either cloud or on-premise hosting primarily boils down to proper implementation.

SecurityCloud security increases when proper authentication and administrative privileges are put into place. Additionally, when companies select a large or well-supported cloud solution, they gain access to around the clock support, so if security is compromised, the cloud provider’s support team may be able to respond more quickly than traditional IT would in an on-premise situation. Conversely, having a dedicated team that you trust in-house may be preferable to outsourcing security to third-party vendors. Regularly updating all on-premise software applications and computer hardware will protect you against attacks.

If absolute control over your data is paramount, on-premise hosting may be a better solution for peace of mind. But for small businesses who do not deal with highly sensitive information, cloud-hosting is a relatively secure solution that will free up company resources to focus on other matters.


Price2) Price and Setup: Recurring Payments vs. One-Time Purchase

The initial cost of installing a cloud solution is low, as there is no hardware or equipment that needs to be built or installed. Setup is also fairly quick. Additionally, cloud solutions do not require you to have an in-house IT department; support for the system is usually taken care of by the vendor. While cloud solutions do require recurring monthly or annual fees in order to continue subscribing to the vendor’s services, these expenses are usually predictable and can be easily incorporated into your budget. Fee structure may scale based on storage capacity. One often overlooked expense, however, is the need to purchase more bandwidth. Though cloud solutions can allow you to store nearly unlimited amounts of data depending on your price point, purchasing more bandwidth may be necessary in order to prevent stalls due to hitting consumption limits if you have many users or are regularly accessing large packages of data.

On-premise solutions do require the purchase of hardware and usually take up significant physical storage space, but systems will not usually need to be replaced for several years. Large enterprises with extensive storage needs may find that paying a one-time setup fee is preferably to paying for services on a monthly basis. Installation can be tricky, however, and may require you to hire outside contractors. Additionally, an IT department will likely be necessary for the upkeep of systems, and you must factor in occasional maintenance costs and the potential addition to your company’s electricity bill if systems need to be kept running around the clock.

Take a close look at your finances before committing to or continuing with cloud or on-premise solutions. For companies without the capital to purchase a complete on-premise solution, a cloud solution might make the most sense just to get up and running, and may even make the most sense over the long-term. Larger companies may determine that that the cost of purchasing an on-premise solution may be worth it considering the relative longevity of on-premise solutions.


Reliability3) Reliability: The Truth About Cloud and On-Premise Downtime

Server downtime can cause huge problems for you, your customers, and for your sales. This means hosting reliability is paramount. Both cloud and on-premise solutions experience downtime for maintenance as well as unplanned outages. Due to press coverage, however, it is a common misconception that cloud solutions experience more outages. This is not the case. According to Wired, most cloud vendors offer 99.9% uptime in their service-level agreements (SALs), and most actually do uphold this standard. A March 2014 study by Nucleus Research showed that customers who used Amazon Web Services cloud experienced a 32 percent decrease in unplanned downtime and a 29 percent decrease in planned downtime, as compared to when they were using on-premise hosting. While the success of Amazon Web Services cannot necessarily be extrapolated to all cloud solutions, experts agree that on the whole, cloud servers are just as reliable—if not more so—than their on-premise counterparts.

Backup is another important reliability consideration. Companies who use on-premise hosting may back up data to tapes or disks, but this could be expensive or clunky depending on the size of the data. Backup can also be expensive for the cloud, however, especially for large organizations, and solutions can become more expensive depending on the number of users. For enterprises, on-premise backup may be a better solution. For smaller companies, cloud solutions with built-in redundancy (the practice of storing multiple copies of your information on multiple servers) may be the best option for ensuring that data will not be lost.


Customization4) Customization for SMBs or Enteprises

One pervasive myth in the cloud vs. on-premise debate is that cloud solutions are not customizable. This was true in the early days of cloud storage, but cloud companies have largely responded to customers cries for more customization. More and more companies are offering custom solutions and the guarantee that these customizations will not break when the system is upgraded. At Clarity, we offer custom integrations, so your cloud solution can be easily integrated with Clarity’s eCommerce platform and customized to your unique needs.

On-premise affords customization as well and may allow you to make more granular changes on the code level. However, deploying the customization can sometimes cause issues when systems are upgraded. For companies seeking more detailed customization that requires advanced programming knowledge, on-premise may be a better choice. Companies in need of simple customizations that can be completed by non programming-savvy users may be more comfortable turning to the cloud.


Accessibility5) Access Across Devices or Countries

Cloud hosting means that you can access your data from anywhere with an online connection. On-premise is less flexible in the sense that users can only access your servers from your office or from a remote desktop connection. In another sense, however, on-premise is more flexible, as offline connections are often available if the Web is not; you can still access some if not all of your data in the event of a lost Internet connection. If your company needs to share data across the globe, is multi-tenant, or if users need access from a variety of devices, cloud hosting may be a better choice. Companies who do not require employees to have remote access will likely find on-premise more suited to their needs.


Clarity Can Help

Whether you're an SMB in need of a cloud solution, an enterprise who's chosen to stick with on-premise, or a company still looking to make a decision, Clarity can advise you and complete integrations to meet you needs. Our advanced developers can customize our Clarity eCommerce™ platform to work with CRMs, ERPs, content management systems, and more. Versatile and scalable, Clarity eCommerce™ with Clarity Connect can grow with your company without compromising security or speed. For a free quote, contact us today!