On-Premise vs Cloud Database Hosting: Which is Right for You?

With data now at the heart of business' operations, how you choose to store, process and manage this crucial asset has become one of the most important factors in a firm's success. Companies that struggle to take control of this will quickly find themselves falling behind, as they don't have the insight they need to meet the expectations of today's customers.

On-premise vs cloud database

How you manage your databases is a key question. In recent years, a growing number of businesses have looked to migrate these applications to the cloud. The likes of Amazon Web Services, Microsoft Azure and Google Cloud SQL have all experienced huge growth, with Amazon alone seeing its cloud revenue increase by almost 50% in the second quarter of 2018.

But is this always the best solution? On-premise tools may not be the most fashionable option for businesses today, but for some scenarios, they could provide a better option for your database hosting. So how do you know which is right for you? Here are a few of the key factors you need to consider and the pros and cons of on-premise and cloud hosting for each.

Cloud-based solutions are more scalable

Perhaps one of the biggest advantages of a cloud-based solution is the ability to scale up and add resources quickly and easily to meet your evolving needs. Cloud providers will be able to furnish organizations with all the tools they require to cope with the growing volume and variety of data that businesses now gather, whereas on-premise solutions may need to undergo a lengthy procurement process to secure the same capabilities.

This could be highly useful if you're expecting rapid growth, opening up new business units or expanding to new territories. However, it can also be valuable for firms in industries such as retail that see significant seasonal variations in activity, as in addition to scaling up on-demand, you can also scale back down again just as quickly.

Consider cost of ownership as well as expenses

In the past, the potential for cost-savings was often listed as one of the strongest drivers of cloud services, but with many businesses now having greater understanding and experience of the cloud environment, there's now a recognition that the picture is more complex than previously assumed. Indeed, recent research by Druva found that only one in five firms say that cost is their primary motivation for migrating to the cloud.

While cloud does have the potential to be cheaper, you need to consider total costs of ownership rather than comparing it to the upfront expenses associated with on-premise. However, even if the costs turn out to be broadly similar overall, companies may be able to benefit from the cloud-based model, where they only have to deal with a single, ongoing operational expense.

Where is your data most secure?

The question of which model is more secure is still hotly debated, particularly when it comes to public cloud options that don't offer the same level of control as private or on-premise tools. While there have yet to be any reports of large-scale breaches that have been attributed to cloud providers, it's still a concern for many people. Indeed, 41.5% of organizations cite the fear of data breaches as their biggest worry about the cloud.

Cloud providers do, however, aim to mitigate these concerns by offering the highest levels of security protection - something which may not be within the financial means of many companies looking to build on-premise solutions. So, if you have a limited IT budget to devote to this, the economies of scale that cloud provides can be very useful.

On the other hand, some more-heavily regulated industries may have more security reservations about using the cloud. Healthcare and financial services organizations, for instance, may decide the greater control offered by on-premise is too important to discount.

How do you remain compliant?

Ensuring compliance with data protection laws is more important than ever in the current strict regulatory environment. With the likes of GDPR and the forthcoming CCPA promising tough financial penalties for any business that fails to take care of its sensitive data, the costs of overlooking compliance are high.

Businesses may feel that an on-premise solution gives them the best chance of remaining compliant, as it puts them in complete control of the entire process and ensures all data is kept within their network's perimeter. However, it can be highly costly to build a secure, compliant environment from scratch.

By contrast, cloud hosting providers benefit from economies of scale, so are typically able to offer industry-leading protection at a fraction of the cost to users. All major cloud providers recognize the importance of offering fully-compliant solutions and have put robust processes in place to ensure data is protected.

However, you’ll still need to answer several questions if you're going down this route, such as determining where data is physically stored and what level of encryption is in place. Ultimately, even if you're handing over day-to-day control of your data, you're still responsible for its security.

Learn more: Data Sovereignty and Cloud: How Do You Ensure Compliance?

The necessity of database speed and reliability

For many firms, a key point in favor of on-premise tools will be the fact that their data will always be right there, in the building, whenever they need it. This means they are fully responsible for their own infrastructure and, as such, don't have to worry about any issues with latency or lag, or any speed limitations that are caused by their internet connectivity. These considerations will be especially important for real-time data processing.

All good cloud providers will offer a solid uptime guarantee - usually somewhere in the region of 99.9% availability - and firms will be entitled to compensation if these promises are not kept. But this still leaves cloud firms with a little leeway for downtime that could be unacceptable for firms where constant availability is a top priority, and any financial reparations may not make up for the impact of lost opportunities as the result of failures to access data.

What about a hybrid solution?

For many businesses, the best way to balance the various pros and cons of on-premise vs cloud will be to adopt a hybrid approach, moving certain workloads and databases to the cloud, while retaining direct control of more sensitive or mission-critical operations.

Hybrid solutions are already a popular choice, with nearly two-thirds of firms (64%) prioritizing some form of hybrid option in 2021, whether this is public and private cloud, or cloud and on-premise.

This can offer firms the best of both worlds, allowing them to combine lower costs and high flexibility with greater control and security. Hybrid environments can be tailored to the needs of any business, ensuring firms don’t have to make compromises by using tools that are ill-suited to certain scenarios.

How does disaster recovery fit in?

An effective backup and disaster recovery (DR) plan is another essential part of any database strategy. If you're looking at cloud options, prospective providers should be able to offer a detailed explanation of what systems they have in place for this and what your rights are should their systems suffer a failure. This should all also be laid out as part of your service level agreement.

A cloud DR plan will require you to maintain an internet connection, which could pose its own problems in some scenarios. Therefore, an on-premise alternative may offer better redundancy. For these deployments, you will of course have to develop your plan from scratch, which will mean additional investment in areas such as hardware.

Creating a secure, redundant system - ideally one that is kept off-site from your primary servers to protect against issues such as power outages and natural disasters - may provide a greater level of control and can ensure swift responses in an emergency. However it’s not only expensive, but will be difficult to scale up or down as your business needs change.