Reasons for, and Advantages of, the On-Premises Data Center and Private Cloud

Cloud software and services are more popular than ever. The latest statistics reveal that around 50% of corporate data is already kept and managed in the cloud. Moreover, it is expected that by 2025 half of all world data will be in the public cloud, amounting to about 100 zettabytes. However, for many companies, on-premises data centers and on-premises private cloud remain a better choice.

Public cloud computing has become a popular solution for many companies looking to improve their efficiency, scalability and cost-effectiveness. However, for several verticals such as banks, healthcare organizations and defense companies, there are several challenges and drawbacks associated with migrating to the public cloud. In this blog, we will explore why some companies prefer to stay off of the public cloud.

An on-premises data center or on-premises private cloud are physical infrastructures located within an organization’s premises. In other words, it is owned, managed and operated by the organization itself. This infrastructure may leverage virtualization and cloud technologies to enhance its capabilities.  It consists of servers, storage systems, networking equipment, and other necessary hardware and software components. Some organizations will build their “on-prem” solution in data centers or colocations that are not strictly their own; this is still considered “on-prem”.

A Public cloud solution is one that leverages the premises and infrastructure offered by a public cloud service provider, such as AWS (Amazon Web Services), Microsoft Azure or GCP (Google Cloud Platform). In this case, the cloud provider assumes responsibility for managing and maintaining all hardware and software, and ensuring all essential resources, including storage and databases, are readily available to meet the customer’s specific needs.

Both solutions offer many benefits, so it really comes down to what the organization needs. This should help you better understand which one is right for your organization. Following are 4 reasons why companies select an on-premises solution for their data center and private cloud, including the advantages they enjoy as a result.

4 Reasons for, and Advantages of, The On-Premises Data Center and Private Cloud

1. Security concerns

Some verticals, such as defense companies and financial institutions, handle highly sensitive and classified information that must be strictly protected.

Cloud service providers typically have strict security protocols and access to advanced security technologies. However, cybersecurity becomes a critical concern as more companies complete their digital transformation and migrate systems to the cloud. According to Check Point Research (CPR), a 48% year-over-year increase in cloud-based cyber-attacks in 2022. The largest increases were seen in Asia (+60 percent), followed by Europe (+50 percent) and North America (+28 percent).

Due to that, some organizations may prefer to keep their crown jewels of data off public cloud infrastructures and use an on-premises infrastructure. In this scenario, the IT team has complete control over security and can set a stricter security policy than the one offered in the cloud, including sometimes physical security measures. This level of control is essential for certain companies that must adhere to strict privacy and regulatory requirements.

Additionally, while cloud service providers do have a presence in multiple regions, they do not cover all countries, which creates a data sovereignty issue for some organizations.

Another example is government organizations that must have isolated networks that are not connected directly to the internet, which forces them to stay off public clouds.

By staying on-premises, companies can keep their data in their own full control, and fully control all security aspects, both physical and digital.

2. Regulatory compliance

Companies that are subject to strict regulations and compliance requirements, such as healthcare organizations and utility companies, have a barrier to adopting public cloud technology. These requirements may include strict controls on access to data, storage and data sovereignty. In some cases, data may be required to be stored within a specific geographic location or within the company’s own infrastructure.

Examples include:

  • Health Insurance Portability and Accountability Act (HIPAA) compliance, which is much easier to achieve on a private cloud because it allows for more granular control over the infrastructure and security features. In addition, physically isolating the environment from other tenants makes HIPAA audits easier.
  • The Payment Card Industry Data Security Standard (PCI DSS) Cloud Computing Guidelines list the advantages of an on-premises private cloud versus the public cloud, both physically and in cybersecurity. 
    • In a private cloud, the physical location of every component is identifiable and can be validated. However, on the public cloud ensuring adequate physical security becomes challenging as infrastructure can be distributed across multiple locations and at different times.
    • In a public cloud environment, data from multiple clients is often stored together, making it an appealing target for attackers. The potential reward for attackers can be higher when compared to targeting individual organizations separately.
  • Conditional data transfer is forbidden unless certain conditions are met. Thus, the EU (European Union) prohibits personal data transfer unless an adequate level of protection is ensured. Other terms apply. 

Staying on-premises can make it easier to comply with strict regulatory requirements, as companies can implement their own security controls and policies

3. Control over data availability

For companies handling sensitive, mission-critical information that needs to be available and reliable 24/7/365, they may prefer on-premises data centers over cloud computing because they have complete control over their data and security. On-premises data centers can be designed to meet the specific availability needs of the company, ensuring high levels of reliability and availability that may not be available in public clouds. Additionally, on-premises data centers allow these companies to maintain continuous operations, even if there is an internet outage or cloud service disruption. Although cloud computing provides numerous advantages and users can exert control over their resources, it is important to note that many underlying specifications are beyond their direct control. For companies with stringent security and reliability requirements, the potential risks and limitations associated with relinquishing control may outweigh the perceived benefits of public cloud computing.

4. Cloud Computing

In addition to the previously listed reasons and benefits, large enterprises can adapt cloud computing at a lower pace than small or medium size businesses. They may do this for any, or all, of the following reasons:

  • Complex IT Infrastructure: Large enterprises may have complex IT infrastructures with intricate interdependencies among various systems and applications. The process of migrating such intricate environments to the cloud can be challenging, time-consuming and costly. Keeping the data center on-premises allows them to maintain the existing infrastructure, connectivity and integration without disruption.
  • Legacy Systems and Customized Solutions: Large enterprises often have extensive investments in legacy systems, customized software or proprietary solutions that may not be easily compatible with cloud environments. These systems may be critical to operations and require significant modifications or redevelopment to function effectively in the cloud. Keeping them on-premises avoids the complexities and risks associated with migrating or refactoring these systems.
  • Cost Management and Predictability: While cloud computing offers scalability and cost savings for many organizations, large enterprises with specific cost management strategies and predictable workloads may find it more cost-effective to maintain their own data centers. They can leverage existing infrastructure investments and have greater predictability of their IT costs over time.

For More Information

The information covered above isn’t an argument for why on-premises solutions are better than their cloud counterparts. It comes down to what an organization needs, and why. No two are alike; each has its own infrastructure fingerprint. That’s why it is always a good idea to work with professionals who know how to protect your infrastructure from cyber threats.

For years, Radware has worked closely with organizations to keep their infrastructure safe, whether it’s using an on-premises solution, a public cloud solution, or a hybrid mix of both. Click HERE to learn how Radware’s Alteon Solution can protect your infrastructure.

Avi Katz

Avi Katz is a senior product manager at Radware with over 30 years of experience leading product lines through all phases to achieve revenue goals and establish new revenue streams. He has extensive experience in a wide range of technologies and solutions, including networking, medical devices, IoT (internet of things), applications and home security. Avi has a bachelor’s degree in electrical engineering and an MBA from Tel Aviv University.

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