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How to Identify the Pros and Cons of On-Premise vs. Cloud Computing

David Eichkorn

It can be risky to put your stuff in the hands of someone else. I’m still hoping to get my copy of Journey’s Greatest Hits back from my college roommate. But when it comes to valuable business data, trusting it to a third party can be a really scary proposition.

That’s why, despite some obvious benefits, many companies are reluctant to put their business data in the cloud. Maybe that’s why we get asked so many questions about cloud storage solutions.

The damages from cybercrime will cost $6 trillion annually by 2021 - more than the annual
global cost of natural disasters.

Keeping your data safe is a big deal. According to IBM’s 2019 “Cost of a Data Breach” report, breaches cost U.S. companies an average of $8.19 million per cyberattack. What’s more, the damages from global cybercrime will cost $6 trillion annually by 2021 – more than the annual cost of natural disasters.

As cloud storage becomes an increasingly popular option for backup and business continuity solutions, it’s important to balance the convenience of online storage with the risks of outsourcing your mission-critical tasks. Cloud services are increasingly popular, but by no means a universal IT solution in the corporate world.

According to IDG’s Enterprise Cloud Computing Survey, U.S.-based companies budget an average of $2.2 million for cloud services, with enterprise organizations investing $3.5 million and SMBs investing $889,000 on average. In addition, 73% of organizations have at least a portion of their computing infrastructure in the cloud, and 17% plan to. The costs of cloud storage space can vary widely.

Traditional IT vs Managed IT Comparison Chart CTA


A Downside of Cloud Storage

A downside to the cloud is that data storage is out of your physical control. Cloud providers can disappear or change hands, putting your data in the hands of a third party you don’t know or trust. And, unlike an in-house IT person, monitoring your data and restoring it in the event something does go wrong likely won’t be their top priority.

An Upside of Cloud Storage

The upside is that, unlike hosting data in-house, cloud computing providers like Microsoft Azure can invest billions of dollars each year in research and development, delivering more robust features, services and security than a single organization can provide for itself. Microsoft invests nearly $15 billion a year in research and development for its cloud-based services, and spends $1 billion on cybersecurity research alone. In theory, cloud service providers have resources that no in-house IT staff could ever hope to match.

So, should you house your business data on physical in-house servers vs. cloud computing? To help you make the best decision for your unique IT needs, let’s first outline the advantages and disadvantages of each.

The Pros and Cons of Cloud Storage

No need for capital expenses or to purchase hardware.
Service and user experience is limited by the speed of the internet connection.
Grows to fit your business needs. Pay for the options you want.
Some third-party cloud services could access your data.
Mobile and remote workers can connect from anywhere, using any computer, tablet or smartphone. Companies can implement BYOD (bring your own device) policies.
If your internet service goes down (or if the cloud provider’s does), you won’t have access to any of your information.
Data can be backed up in the cloud, minimizing data losses in disaster situations.
Even giant cloud services like AWS and Microsoft have suffered service outages and have been the victim of Denial-of-Service attacks.


The Pros and Cons of In-house Servers

Gives you physical control over your server.
Requires a capital investment in hardware and infrastructure.
Keeps critical data in-house; no third party has access to your information.
Requires a server room or closet in your office for rack space, as well as dedicated IT support.
No need to rely on an internet connection for access to data.
Requires off-site or even cloud backup services to ensure you can recover data in the event of a fire or other disaster. Without a properly working backup system, data loss could be permanent.
Can be more cost-effective for companies that are not as concerned about uptime.
If downtime occurs, recovery of data or systems could be lengthy while waiting for replacement equipment or diagnosis and repairs. Many cloud providers offer uptime guarantees.


Today’s threat environment is more complex than ever, meaning in-house IT staff needs to deploy and maintain a firewall, intrusion prevention system, a Virtual Private Network (VPN) for remote access, anti-virus/anti-malware software, separate appliances for email security and have a robust disaster recovery plan. In addition, many corporate clients insist that partners meet data security or regulatory standards (such as the Health Insurance Portability and Accountability Act) before sharing sensitive data.

Many in-house IT networks are managed from a supply closet or backroom, giving open data center access to anyone who may enter the office. Organizations that rely on local, on-premise software or solutions often must fall back on unsecured or even archaic mechanisms to move and share data, including mailing data on external drives or disks.

However, a local software installation offers benefits as well. When using third-party file-sharing services, the data is typically taken outside of the company’s IT environment, and that means that the data’s privacy settings are beyond your control. Different cloud service providers offer various options for data storage and handling. Finding a cloud storage service that provides automatic data encryption means that anything you share or store with that provider will be safe.

Additional risks include malicious hacks of cloud providers or compromises of user accounts. The best way to avoid potential risks is to ensure your provider encrypts your files during storage, as well as transit, within a range of 128 to 256 bits. Securing your login credentials might require an investment in a secure password management service. Also, make sure you read the provider’s terms and conditions and scrutinize its data protection policies before using its services.

Whichever solution you choose — in-house hosting vs. cloud-based hosting — the IT experts at Elevity can help you determine the right setup to meet your specific business needs. Contact Elevity for a no-cost assessment and to learn more about how our Managed IT services can help secure your local or cloud-based IT infrastructure.

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