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On-prem vs cloud hosting – what's the best option?

When it comes to hosting digital solutions, there are essentially two options: locally on-premises (on-prem) or in the cloud. Hosting refers to where your software is installed.

What does on-prem hosting mean?

When something is hosted on-prem, it means that the software, along with its infrastructure, is managed and run on servers located in your own facility. This means that maintenance, security, updates, availability, etc., are your responsibility. Users of the software access it through the company's internal network, and if they don't have VPN, they must be on-site to access the systems on your local server.

Local or on-prem hosting is also called on-premises, where "premises" refers to the physical location used for hosting.

What does cloud hosting mean?

The cloud. A term that has gone from something abstract and super high-tech used only by the tech world to something that’s now seen as a general term, largely thanks to services like Google Drive and Apple's iCloud.

The cloud refers to a shared computing resource and was originally developed to make it easy for users to access and share data. Over time, use cases have evolved dramatically, especially in recent years, and the cloud is now almost more about the distribution and delivery of services. Giants like Amazon, Google, and Microsoft now offer their own cloud services containing extensive tools for businesses to build and manage various types of IT solutions.

When something is said to be in the cloud, it means it's installed on external servers owned and maintained by a cloud service provider. Users can access the content regardless of the device and network they use.

Differences between the cloud and on-prem

Let's go through some areas where the cloud and on-prem differ:


As already mentioned, an on-prem solution resides on your local servers, and you own the entire infrastructure. A cloud solution, on the other hand, is hosted on an external server owned by a cloud service provider.


With on-prem hosting, you own the server and need to purchase hardware, infrastructure, and network equipment, which can be costly. The costs for a cloud solution are paid monthly, often in the form of a "pay-as-you-go" model. You only pay for the resources you use, making it a cost-effective and flexible alternative. No initial investment is required.

Maintenance and management

If your solution is locally installed on a server, you are responsible for everything related to it, from operation to security and performance. All maintenance, including hardware updates, patch management, and backups, is your responsibility. With a cloud solution, the cloud provider is responsible for parts of the infrastructure - how much depends on the services used and how the service is designed.

Scalability and flexibility

If your solution is hosted in the cloud, there are no limitations when it comes to scalability. You can easily increase your resources as your data grows, and the same goes for decreasing resource needs. Again, you only pay for what you use. With an on-prem solution, you are instead locked to the capacity your physical server possesses. If you need to scale up, the alternative is to purchase more infrastructure, which is often both expensive and time-consuming.


With a locally hosted solution, you choose and invest in the security tools you want and need, including managing disaster recovery, which can be both complex and costly. With a cloud solution, security is often a shared responsibility between you and the cloud provider. Depending on the provider and your solution, it can be said that the cloud provider is primarily responsible for the security of the infrastructure, while you manage security at the application and data levels. Regarding disaster recovery, there are tools that make it easier for you to ensure business continuity.

Hybrid solution

Both the cloud and on-prem have their pros and cons, leading many companies to choose a hybrid solution – simply to get the best of both worlds. For example, you can leverage the scalability of the cloud while maintaining responsibility for certain parts of the infrastructure. For instance, frontend components can be in the cloud while backend databases are hosted locally.

Many companies also choose to have some applications on-prem and others in the cloud. This may be because some of them handle sensitive information, and the companies want to control the solution themselves.

What's the best option for your business?

It's impossible to say which hosting option is the best; it depends on your business. All organizations are unique and have different requirements for different parts of their operations. Since both options have their pros and cons, it's essential to determine what is most important to prioritize.

Many of our customers are larger companies with a relatively large number of complex systems. Overall, it's a good idea for these types of company to migrate to the cloud because their operations are large-scale, and they find themselves limited by on-prem hosting. Additionally, if using the cloud, they can easily start new projects without having to wait for the purchase of new infrastructure.

Many solutions that we develop are built in the cloud, including integration platforms. We primarily use cloud services like AWS (Amazon Web Services) and Azure.

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