"Move everything to the cloud" has been the default advice from the tech industry for years. And for many businesses, cloud infrastructure is the right answer. But not for every workload, every business, or every situation.
The decision between cloud and on-premises isn't binary. It's a business decision that depends on your operations, your budget model, your compliance requirements, and how your team works. Here's an honest comparison to help you figure out what fits.
On-Premises: What It Means
On-premises (on-prem) means your servers, storage, and networking equipment live in your office, your server room, or a colocation facility that you manage. You own the hardware, you control the software, and your IT team (or IT provider) maintains everything.
On-Prem Advantages
Full control. You decide what hardware to buy, what software to run, how the network is configured, and when updates are applied. Nothing changes unless you change it.
Data stays local. For businesses with strict data residency requirements or concerns about third-party access, keeping data on hardware you physically control provides a level of assurance that cloud can't match.
Predictable performance. Your applications aren't sharing resources with other customers. Network latency to local servers is near zero. For performance-sensitive workloads — large databases, real-time applications, high-volume processing — on-prem can deliver faster, more consistent performance.
No recurring subscription. You buy the hardware once (with a typical 5-year lifecycle) and own it. For stable workloads that don't fluctuate, the total cost of ownership can be lower than cloud over the long term.
On-Prem Drawbacks
Upfront capital expense. Servers, storage, networking, UPS systems, cooling — the initial investment is significant. A basic server infrastructure for a small business can easily run $15,000–$50,000 or more.
Maintenance burden. Hardware fails. Firmware needs updates. Warranties expire. Someone needs to manage the physical infrastructure, and that's either your time or your IT provider's billable hours.
Disaster vulnerability. If your office floods, catches fire, or loses power for an extended period, your on-prem infrastructure goes with it. Recovery depends entirely on your backup and disaster recovery plan.
Scaling is slow. Need more capacity? You're ordering hardware, waiting for delivery, racking, configuring, and deploying. That takes weeks, not minutes.
End-of-life cycles. Servers have a finite lifespan. Every 4–5 years, you're facing a capital expense to replace aging equipment — and the migration headaches that come with it.
Cloud: What It Means
Cloud infrastructure means your servers, storage, and applications run in data centers operated by providers like Microsoft (Azure), Amazon (AWS), or Google (GCP). You access everything over the internet and pay a recurring fee based on usage.
Cloud Advantages
Operational expense model. No upfront capital investment. You pay monthly or annually for what you use. This shifts IT from a capital expense to a predictable operating expense, which simplifies budgeting and preserves cash flow.
Scalability on demand. Need more storage, more compute, or more capacity for a seasonal spike? Scale up in minutes. Scale back down when you don't need it. You're not buying hardware for your peak load and paying for it year-round.
Built-in redundancy. Major cloud providers replicate your data across multiple data centers automatically. If one facility goes offline, your services fail over to another. This level of redundancy would cost a fortune to build on-prem.
Anywhere access. Cloud services are accessible from any location with an internet connection. This is foundational for remote and hybrid work, multi-site businesses, and mobile teams.
Automatic updates. The cloud provider handles hardware maintenance, firmware updates, and infrastructure patching. Your applications run on current, supported platforms without hardware refresh cycles.
Disaster resilience. Your infrastructure isn't tied to a physical location. A natural disaster at your office doesn't affect your cloud services. Your team can keep working from anywhere while your office recovers.
Cloud Drawbacks
Recurring costs add up. Monthly cloud spending can exceed on-prem costs over time, especially for stable workloads that don't benefit from elastic scaling. Cloud costs that seem small per-unit can grow significantly as your usage increases.
Internet dependency. If your internet goes down, your cloud goes down. For businesses in areas with unreliable internet or businesses running latency-sensitive applications, this dependency is a real risk.
Less control. You're operating within the cloud provider's framework. Their outages become your outages. Their pricing changes affect your budget. Their platform decisions can force migrations or changes to your architecture.
Data sovereignty concerns. Your data lives on someone else's hardware, potentially in another state or country. For some industries and compliance frameworks, this creates challenges around data residency and third-party access.
Cost unpredictability. Usage-based pricing means costs can spike unexpectedly. A misconfigured service, an unexpected traffic surge, or runaway storage growth can produce surprise bills.
The Hybrid Approach: Best of Both
Most businesses don't need to go all-in on either approach. Hybrid infrastructure combines on-prem and cloud resources to match each workload to the right environment:
Cloud makes sense for:
- Email and collaboration (Microsoft 365)
- File storage and sharing (OneDrive, SharePoint)
- Backup and disaster recovery (cloud-replicated backups)
- Web-facing applications and customer portals
- Development and testing environments
- SaaS applications (CRM, accounting, project management)
On-prem makes sense for:
- Legacy line-of-business applications that aren't cloud-compatible
- High-performance databases with large data volumes
- Applications requiring ultra-low latency
- Workloads with strict data residency requirements
- Equipment that interfaces with local hardware (manufacturing, medical devices)
The hybrid model lets you migrate what makes sense to the cloud while keeping workloads that benefit from on-prem right where they are. Over time, as applications are replaced or updated, more workloads naturally shift to cloud.
How to Decide: The Right Questions
Instead of asking "should we move to the cloud?" ask these:
What applications are we running, and are cloud-compatible versions available? If your core line-of-business application only runs on a local server, cloud migration for that workload requires replacing the application first.
What's our internet reliability? If your area has frequent outages or limited bandwidth, cloud-dependent operations become a business risk. Invest in redundant internet connections before going cloud-heavy.
What are our compliance requirements? HIPAA, PCI-DSS, and certain state regulations have specific requirements around data storage, access, and residency. These need to be addressed in your cloud architecture, not ignored.
What's our budget model? If your business operates on capital budgets with planned hardware refreshes, on-prem may fit your financial structure. If you prefer predictable monthly operating expenses, cloud aligns better.
How important is scalability? If your needs are stable and predictable, on-prem's fixed cost may be more economical. If you experience seasonal fluctuations, rapid growth, or unpredictable demand, cloud's elasticity pays for itself.
What happens if our office is inaccessible? If the answer is "everything stops," cloud infrastructure provides business continuity that on-prem alone can't match.
The Migration Path
If cloud is the right direction, the migration should be methodical:
- Assessment — Inventory all workloads, dependencies, and data. Identify what can move, what should stay, and what needs to be replaced.
- Architecture — Design the cloud environment with security, performance, and cost optimization in mind. Don't just lift-and-shift — rearchitect where it makes sense.
- Pilot — Migrate a non-critical workload first. Validate performance, connectivity, and user experience before moving production systems.
- Migration — Move workloads in phases, with rollback plans for each phase. Test thoroughly after each move.
- Optimization — Monitor cloud spending, right-size resources, and adjust configurations based on actual usage patterns.
Rushing this process creates outages, data loss, and cost overruns. A phased, planned migration avoids all three.
We'll Help You Find the Right Fit
At Pivvr, we don't push cloud for the sake of cloud. We assess your environment, your workloads, and your business needs, then recommend the infrastructure approach that makes the most sense — whether that's full cloud, hybrid, or keeping certain systems on-prem.
As a Microsoft 365 reseller and managed IT provider, we handle the entire lifecycle: assessment, architecture, migration, and ongoing management. You get an infrastructure that fits your business, not someone else's playbook.
Ready to figure out where your infrastructure should live? Contact us today — we'll help you plan a migration that makes sense for your business.