On-Premises vs Cloud Data Storage: Which is Right for Your Organization?

On-Premises vs Cloud Data Storage: Which is Right for Your Organization?

Regardless of the industry in which your company operates, it probably uses data. Retail businesses use data to track sales and optimize marketing campaign, financial institutions use it to assess risks and protect against fraud, and even healthcare businesses use it to store patient information.

As computing hardware and software improves, companies will continue to produce more data. According to a study conducted by IDC Research, the world's data will grow at a compound annual growth rate (CAGR) of approximately 42% through 2020. Other studies suggest that the world will produce 44 zettabytes within this same period.

Of course, there are several ways to store data, including on-premises and the cloud. Each method has its own advantages and disadvantages. So, which storage method is right for your company?

On-Premises Data Storage

The term "on premises" refers to local hardware, meaning data is stored on local servers, computers or other devices. For example, a company may purchase a server on which to store data. After buying the server, the company sets it up at their headquarters and uploads their data. Because the server is locally operated, it's considered on-premises data storage.

Many organizations are reluctant to choose on-premises data storage because of its high cost. Buying a server and the necessary software alone can cost up to $5,000. Furthermore, you may need to hire a professional IT company to set it up, which can add another $1,000 to $3,000 to the total. And like desktop computers, servers don't have a finite lifespan; they typically last for about six years, after which they become obsolete and should be replaced.

There are also indirect costs associated with on-premises data storage. Powering a single server, for instance, costs approximately $731 per year, according to the US Energy Information Administration. If you have six servers, you'll pay $4,386 per year just in electricity.

However, a critical advantage of on-premises data storage over cloud storage is security. According to a report by Risk Based Security, more than 4 billion data records were compromised in 2016. While no single method is 100% effective at preventing breaches, storing data locally can certainly help. With data stored on a local server, remote hackers are unable to access it.

Even if remote hackers cannot gain access to locally stored data, disgruntled employees or former employees may. A 2009 study conducted by the Ponemon Institute found that 59% of employees who are fired or leave on their behalf take sensitive data with them. Therefore, organizations should still implement basic security safeguards when using on-premises data storage.

Cloud Data Storage

On the other hand, cloud data storage involves storing data on remote servers or hardware that are maintained by a third-party service provider. The service provider sells usage -- storage space, bandwidth and sometimes data access requests -- to organizations.

As you can expect, cloud data storage is almost always cheaper than on-premises solutions. By using the cloud, you can buy a specific amount of storage space based on your organization's needs. If you only need 14 TB of disk space, you can buy exactly 14 TB of space on the cloud. In comparison, you may have to buy a full 20 TB drive when setting up an on-premises storage solution.

Cloud data storage can also scale to your organization's needs. Most reputable cloud service providers allow customers to add storage space to their plan. Whether your organization needs another 100 GB or 10 TB, you can add it to your plan. And if your organization's data needs decrease, you can adjust your plan accordingly to avoid paying for unnecessary space.

To shed light on the cost savings of cloud vs on-premises servers, SherWeb conducted a study in which it found the average cost of an on-premises server was $1,476.31 per month, while the average cost of a cloud server was $313.90 per month.

Another benefit of cloud data storage is the ability to access data from anywhere, anytime. Cloud customers are typically given an IP address login credentials, which is used to access the cloud over the internet. This alone is reason enough for many companies to store data on the cloud.

Data that's stored on the cloud, though, is potentially accessible to anyone with an internet connection. Encryption can reduce the risk of a data breach, but cloud servers are still more vulnerable than on-premises servers. If a hacker gains access to an organization's cloud through a phishing scheme, he or she could steal their data.

Not all cloud storage services are susceptible to data breaches, though. Public clouds are used by multiple organizations, but private clouds are limited to a single organization. Therefore, private clouds offer a higher level of data security than their public counterpart. According to a recent report by 451 Research Group, 70% of IT executives say security is the leading growth factor of private clouds. The bottom line is that if you're going to store sensitive data on the cloud, use a private cloud service.

Cloud servers are also susceptible to outages and downtime, which can occur either at your end or the provider's end. If your internet connection goes down, or if the provider's connection goes down, you won't be able to access your organization's data.

Hybrid Data Storage

A third option, however, is hybrid data storage. Rather than choosing between on-premises and cloud solutions, why not use both? Hybrid data storage offers the best of both worlds by using both storage solutions.

A common example of hybrid data storage is when an organization stores its primary data on a local server but stores backup copies on the cloud. Granted, this is more costly than simply choosing a single storage option, but it also protects against unforeseen disasters. If a fire or flood occurs at the organization's server room, it could destroy their locally stored on-premises data. Since the organization's backups are stored on the cloud, however, they can restore their lost data with minimal interruption.

There are pros and cons associated with each data storage solution. On-premises requires a substantial monetary investment but also offers the highest level of security; cloud storage is affordable, scalable and can be accessed over the internet, and hybrid brings them both together. Consider your organization's short- and long-term needs and choose the data storage option that's best suited.

Share This Post


Read Our Other Blog Posts.