• Reza Nilofer

On-premise versus on the cloud for small to enterprise businesses.

Updated: Nov 18, 2019

Cloud sounds cool, cloud sounds sexy. But is this a want or a need? Right there does lie the answer to most of the questions in life, do you need this. No you do not need a Ferrari and no you do not need a penthouse with an infinity pool, but we are who we are. Humans, after all, are creatures of excess.

As with the usual IT Block style, we will highlight some points and work on them for you to read and understand. The decision is best left to you, we are after all at best just advisers here. And our advice is what you will have by the end of this read.

Cloud, no way out.

Large scale enterprises really need to be careful when considering the cloud as an option. Many cloud solutions out there in the market offer great services and rates. They even extend out a free consultation with their support team and for enterprise-level packages, it is common for these cloud or CAAS services to allocate their IT or support team to your beck and call. They will throw in free migration from your on-premise solution or server room to their cloud-based resources. It all looks good and it all works well.

Now, this is the second year you are using their product and the rate goes up by a hundred percent. You feel betrayed and you want out. How?

Say you begin to realize that it was much better to have an on-premise solution after all, but is it really in the interest of your cloud provider to assist you in migrating all of your information out and back to your on-premise servers. Of course not.

So now they send you a bill on how much it would cost for their migration services, it's numbers you never thought were possible.

Servers are goldmines

Okay, this is a prediction, a foreseeable prediction from us in fact. Server rooms are going to become goldmines in the future. Especially if you are in a metropolis and so is your office.

Companies like Netflix, Google and Facebook constantly struggle to find computing space for their applications to run on. Which is why they are constantly building server farms as part of their global content delivery network. Sooner or later, they may even start tapping into privately owned server rooms. In fact, they already have outsourced some of their operations to large-scaled privately owned server farms. But eventually, due to costs and limitations of locations, they may start knocking on the doors of underutilized server spaces. Say you have a server room that can hold twenty server racks and currently you only have maybe four racks of servers. The remaining 16 spaces could be rented out. But we are digressing obviously. Servers are an investment and they are subjected to lifespan. Solid-state drive servers are still too expensive, much these days still rely on hard disk drives (enterprise-grade) running on their servers. And these drives do have a lifespan of about 5 years or so. And eventually, the processor and the server itself will become obsolete. The only advantage of having your own ERP system integrated into your HRMS system and whatnot. It is a complex design that took a long time and a lot of money to develop. For small organizations with limited budgets, this is never a good option of course. Money is tight and such spending is considered lavish, they are much better off subscribing to a cloud platform with such a low headcount.

It's all about the money

For enterprises, on the other hand, servers can become a very cheap option since one server can technically serve a large number of people. And in a large organization, that makes sense, the amount per head. Sometimes a cloud option for enterprise is cheaper, but always cost it from their single user package to get an idea of what this is truly costing them. If their single user is five dollars and their enterprise is one hundred. It does not make sense for you to allocate a hundred people to the enterprise license, it is suspicious as to how this would work when the real cost for one hundred people should be five hundred dollars. And most enterprises have employees in the tens of thousands. How can these cloud providers survive from these price points? It does not make any sense to us.

However, if you are a medium organization with less than a hundred people manpower. A cloud solution may be the best solution. You can go from cloud to cloud if need be or you can always expand and start afresh with a server room when the time comes and your company has grown substantially. But at the moment, paying only a few hundred or thousand as opposed to tens of thousands (not including the air-conditioning bills running twenty-four seven in your server room), might be the smarter solution.

S, M & L

That is such a nice picture. It is both profane and innocent at the same time, we love it. But yes, size does matter. Many would agree. Also, it is not just the size, it is how you use it.

There is no real cloud versus server room argument that holds true as a one size fits all. Cloud solutions are after all subscription-based and with all subscription-based services, the less subscription you have the cheaper it is. But the one issue we do see over and over again, what is the real contingency here. We are convinced to trust these cloud solutions categorically. They say they cannot fail, but that is not true of anything.

And for an enterprise that has everything on-premise, is that really the safe and smart option too? It is much more cost-effective to have a server room that cost you a million dollars if you have thousands of employee. The cost per head makes sense and the high availability of the resources is second to none. But what if a fire breaks out?


We think the real solution in the future for large and small enterprises alike might be some form of a hybrid solution. Technically these solutions are already available and many large organizations design their systems this way. Think of it as a king of cache solutions that acts like a plug and play. Imagine setting up your on-premise hybrid cloud solution. And you have a new office, you start up a few servers and the information is just copied over or cached over to the next server. Almost no need to program again or anything. Maybe a few tweaks here and there. This is the main reason why most enterprises have never really migrated over completely to the cloud. It does not make sense, monetarily mostly. And with small servers like NAS devices being able to host websites and applications these days, what is to stop a small-sized company from doing the exact same thing? Host your application on the NAS and also have it replicated and run on an AWS or Azure or Gcloud instance. It is definitely doable. No need for subscription services. Cool right?

Thank you again for reading and do like and share this blog if you can. You're the best.