What Are the Core Differences between On-Premise vs. Cloud Data Storage?


While cloud data storage was created all the way back in 1960, it was not popularized until 1990. In the 30+ years since then, cloud data storage has grown into an industry worth more than $83.41 billion, with a year-on-year growth rate of 24%. While this technology has taken the world by storm, many businesses still use their legacy on-premise storage solutions.

In fact, while many businesses are making the leap toward cloud data storage, an incredible 98% of companies still have elements of on-premise storage hardware within their business. This is due to the fact that on-premise storage was the industry go-to for many years, meaning that even companies that have made the change still have their on-site tech around.

What is making companies move to the cloud if on-premise storage is so common? As a more modern system, cloud data storage offers a range of additional benefits contributing to its success. By taking a look at the five main differences between on-premise data storage and cloud data storage, we’ll be able to outline precisely why people are making the switch.

What is on-premise storage?

On-premise data storage is when a company builds a data architecture within its own site. Within their building or campus, they will have a server room that is filled with computers and other large-scale storage devices. With this, all of the company’s data is stored in one convenient location.

As a company has to pay for the upkeep of this data room, as well as all of the technology and staff that go into creating and maintaining it, on-premise storage often requires a large input of capital to start. This storage is located on-site and will need to be managed by your own company, meaning that whenever there is a software or license upgrade or update to go through, your company will need to make sure that you are running the most recent additions. As this is a large part of compliance, you will need IT experts continually check and implement any potential updates.

What is cloud data storage?

If on-premise storage is on-site, cloud data storage is any form of storage that is based elsewhere, often hosted by a third-party company. As all your company’s data is stored online, your employees are able to access it from absolutely anywhere. Equally, as you are only buying space on the cloud servers and not the server setup itself, businesses are able to turn to this as a cheaper solution to storage.

Colocation data center market revenue worldwide in 2019 and 2025
Colocation data center market revenue worldwide in 2019 and 2025, in billion U.S. dollars (Image: Statista)

Currently, there is a range of cloud data storage businesses available, creating packages for businesses of any size. Due to the wide availability of these services, one of the hardest elements of starting with a cloud provider is choosing the right one for your business.

Luckily, with the popularity of cloud storage, there is now a range of different comparisons of some of the largest cloud data services, like Clickhouse vs. BigQuery or a comparison between other large-scale cloud organizations. This help businesses understand what they need and which service provider matches closest to those specific functions.

Why are businesses making the leap to the cloud?

While on-premise data storage was the go-to solution for many years, businesses are now migrating their main storage facilities onto the cloud. This aligns with the exponential growth of data over the past ten years, with trillions of Google searches every single year and quintillions of data bytes being created.

With the increasing amount of data that businesses must navigate through and understand, the pressure put on local systems is becoming far too great. Due to this and many other factors, firms are rapidly beginning to make the change.

There are five core differences between on-premise and cloud data storage which have further facilitated and accelerated the switch.

Cloud data storage is much more accessible than on-premise storage

Fifty years ago, the world of work looked radically different from what we now experience. Working from home was unheard of, and the 16% of global companies that only offer remote work were far from being founded. In this older world of work, where people would commute to the office every single day, an on-premise storage solution worked perfectly. As everyone was already located in the building, accessing the data they needed to do their jobs aligned with the on-premise system.

However, as the world of work has begun to shift toward remote working opportunities, especially accelerated by the pandemic, businesses now need more accessible forms of data. No matter if an employee is working in the office or is at home, they still need to be able to access company data to do their jobs.

That’s where cloud data storage comes in, directly allowing remote workers to access files from the cloud and continue working. Cloud data storage is much more accessible when compared to on-premise storage, meaning it is a data format that is much more aligned with the modern world of work.

As businesses continue to move to more hybrid or remote forms of working, we’re likely to see this particular difference between on-premise data and cloud data become a more pronounced reason to make the switch.

Cloud data storage costs less than on-premise storage

Another core difference between on-premise and cloud data storage is the amount of capital that it takes to start with and sustain each system. Within on-premise storage, companies need to buy physical space for their services and all of the required IT. Online platforms and have to pay IT staff to upkeep their on-site storage. While there are some advantages to the cost of on-premise, the enormous amount of money that needs to be invested in the business to create on-site storage often far exceeds the amount that cloud data storage would cost.

Number of data centers worldwide in 2022, by country
Number of data centers worldwide in 2022, by country (Image: Statista)

With cloud data storage, your company neither needs to buy real estate space nor any of the actual technical elements of the storage. On the contrary, the only cost to your business is the recurring bill from the cloud partner that you work with. Due to this, companies can save lots of money when they turn to cloud storage over on-premise storage.

As businesses work by reducing as many costs as they can while drawing in profit, any chance to save money on data storage is a huge win.

Cloud data security is now more robust than on-premise storage

While the cloud was once a new technology, with much less exposure and funding, it is now an established option for businesses. Many years ago, it was true that cloud data storage had much worse security than its on-premise counterpart. However, with the leaps that have been made in this field, and the availability of funds, cloud data warehouses now offer an advanced level of security that few on-premise storage options can reach.

On-premise security has the advantage that it is deeply customizable, with a business being able to select which specific cyber security platforms they want to partner with. When it comes to cloud data companies, they make the decisions about the types of security they host. However, considering that their whole business model is holding data and keeping it safe, you can imagine that no expense is spared when ensuring their cyber security is up to scratch.

Equally, with on-premise data storage, if you want around-the-clock security, then you need to ensure that your business has staff working 24/7 – which naturally incurs quite a high cost. On the other hand, when partnering with cloud storage, they provide complete security for your data, offering around-the-clock support without adding any additional charges.

While on-premise used to win out in the security section, cloud data storage is now a much safer option for your business.

You can scale your cloud data storage with ease, while on-premise is fairly inflexible

When constructing an on-premise data storage solution, you have to buy physical space and physical servers and ensure they fit into a specific room with enough air conditioning and staff to oversee their safety. With this process, you have a limited amount of space to fill with potential storage servers. If you fill those up with data, then the only way that your business could hold more data is to either get rid of past data or build another storage facility.

Survey: Do you believe that one day application workloads will move freely across clouds and what will be the primary driver?
Survey: Do you believe that one day application workloads will move freely across clouds and what will be the primary driver? (Image: Statista)

Due to this, on-premise data storage is very inflexible when it comes to scaling your business. If you don’t anticipate how much data your company is going to collect, then you’ll run out of space and need to buy more, leading to further costs. On the other hand, if you want more space for your business when using cloud data storage, all you need to do is select a larger data package.

What takes months of construction and planning with on-site storage will take a few clicks online with cloud storage. The core difference here is how scalable cloud data storage is, with this being a great choice if your business is likely to increase the amount of data that it’s dealing with or needs to manage over the next few years.

The cloud has more up-time while on-premise could suffer from local issues

As on-premise storage is inherently tied to a physical location, if there are problems – such as a natural disaster, a power outage, or WiFi being out – then your company is unable to access your own data. Due to relying on local services, if any problems do occur, you must wait until they’re fixed to recover any data that you need. This means that your business could suffer massive outages.

If your business relies on fast transactions as its core purpose, then being locked out of your own data could lead to significant losses for your company. With cloud storage, on the other hand, their facilities are normally located all over the world.

In the unlikely circumstance that one of the cloud data storage facilities suffers an accident and loses its capabilities, there are networks of other bases around the world just waiting to step in. This flexibility ensures near-perfect uptime when relying on cloud data storage, helping your business to work efficiently around the clock.

This is also useful for remote companies that have employees across many different time zones. With this 24/7 model of management, people will be able to access their data, even if it’s currently out of working hours within the main timezone for the company.

Wrapping Up

The core differences between on-premise and cloud data storage are also the reasons why businesses are deciding to make the change. As cloud data becomes more convenient, more secure, and useful for growing businesses, it’s rapidly converting itself into the industry leader for storage.

While on-premise data storage does indeed have some benefits, they are mostly now obsolete due to the rapidly growing cloud industry. Over the next ten years, especially considering the flood of income into the cloud field, we’re likely going to see further developments that push the cloud ahead of its on-site storage counterpart.

Photo credit: The feature image has been done by Gorodenkoff. The infographics were done by Statista.

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