Private cloud vs. on-premise: what are the differences?

The private cloud and on-premise initially seem similar, but they are very different. In this blog, we explain the main differences between the two terms.

Evolution of hosting solutions

Today, we're fully immersed in the container revolution, and platforms like Kubernetes help orchestrate container apps, regardless of which cloud they're in. This means developers no longer have to wait for a server to be installed and can deliver new software quickly and with fewer errors.

This wasn't always the case - not too long ago, companies had to choose between hosting software on-premise or in the cloud. The 'cloud' was then a virtual server from a hosting provider where you stored data and made software available via the internet.

Different types of clouds quickly emerged. Opinions about these cloud types differ, but you're probably familiar with them: public cloud, private cloud, and hybrid cloud. In this blog, we zoom in on two terms that seem similar: on-premise and private cloud.

What is on-premise?

On-premise refers to software that is stored at a company's location. It's jokingly called the 'server in the broom closet.'

There was a time when almost every company had one or more servers on location. For example, this could be at the office in a server room. Some companies still have such server rooms because they prefer to manage certain applications themselves or because these applications aren't yet suitable for cloud computing.

On-premise software is sometimes also called legacy software because it often refers to software that has been in the organization for some time. Sometimes, it's a single bare-metal server; other companies have multiple servers and use virtualization software to host on-premise software efficiently.

What are the advantages of on-premise?

There are often several reasons why companies choose to host on-premise software themselves:

Transparent costs

An important factor in private cloud vs. on-premise is the cost. Within IT, there are roughly two different forms of costs: Capital Expenditure (CapEx) and Operational Expenditure (OpEx).

With CapEx expenditures, the costs are one-time. For example, you buy the server once and don't need to make any more expenditures because the server has already been purchased. Only when the server breaks down or needs replacement are new costs incurred.

With OpEx expenditures, the costs fluctuate. In most cases with cloud computing, you don't pay once, but you pay a fixed monthly amount based on what you use.

Almost all costs for on-premise software fall under CapEx, making the costs predictable and transparent. With cloud computing, costs are harder to predict in advance because there are more variables.

Ownership and control

When hosting on-premise software, the owner has complete control over the software, the server, and middleware, such as server software and the operating system. They determine what happens with the server and who has access.

This often gives companies the feeling that they have a grip on all aspects of hosting, including the security of the server software and the hosted application.

In reality, managing an on-premise server also takes much time and isn't necessarily safer than the cloud. The on-premise server also needs maintenance. Think about updating the operating system when there's a security vulnerability. The company risks losing valuable data if this doesn't happen quickly enough.

Application can't move to the cloud yet

In some cases, companies choose on-premise because the software can't be moved to the cloud yet.

This might involve an application intertwined with all business processes and is, therefore, difficult to migrate. Think of a self-developed application, CRM software, ERP software, or a financial system.

In recent years, companies have been increasingly exploring microservices. With microservices, an on-premise application can be partially rebuilt and gradually moved to the cloud. Instead of redeveloping or migrating the entire application in one piece, the most important parts are first created as microservices. Through hybrid cloud services, both the on-premise software and the new microservices can work properly.

However, this takes developer time and requires a different way of working, for example, with Docker containers. Not every company is ready for this or has the people employed to do so, making on-premise a better option in those cases.

What is a private cloud?

A private cloud seems similar to an on-premise environment at first. In both cases, there's the same basic principle: the environment belongs only to the company - you don't have to share the computing power of the underlying server(s) with others.

Yet there's a significant difference, namely the location. A private cloud is an environment that's located outside the company. This could be at a managed hosting provider like TrueFullstaq or another cloud service provider. Just usually not at a cloud provider like Microsoft (Azure cloud), because they generally don't offer private cloud services.

What a private cloud is usually differs per hosting or cloud provider. At TrueFullstaq, we see private clouds as a platform consisting of several (clustered) dedicated servers running very fast virtual servers. This environment is completely tailored to the application we host on it. Also, the components of the servers (such as CPU and memory) are not shared with others, and all servers are guaranteed to be located in the Netherlands.

This is generally the case with other hosting and cloud providers as well, though there are also providers who call a Virtual Private Server a private cloud platform.

Everything in a physical server is replicated in a virtual server, from computing power (CPU, memory) to operating systems and software needed for hosting. At TrueFullstaq, we've optimized the virtual servers on our physical servers so that our private cloud platform has the best performance.

What are the advantages of private cloud?

These are often reasons and advantages why companies want to switch from on-premise to private cloud.

Cost control

The costs of a private cloud are often variable. You pay for what you use in computing power and services from the hosting provider. This is also called Operational Expenditure (OpEx).

OpEx makes it harder on one hand to estimate costs because usage can vary. On the other hand, it makes it easier to minimize costs because the use of resources can also be scaled back. For example, suppose a company needs fewer resources than estimated or needs to save on specific business components. In that case, it's possible to save on the costs of a private cloud.

Additionally, to manage on-premise software, a system administrator must be employed. You no longer need to incur those costs with a private cloud because the hosting provider employs numerous system administrators. They keep a close eye on the private cloud environment with monitoring tools. This allows them to receive notifications if too many resources are being used or the software has security vulnerabilities.

Performance

The hosting provider of a private cloud often has much experience optimizing the performance of an application. Because they do this for multiple parties, they can also apply these best practices to your private cloud environment.

At TrueFullstaq, we have years of experience with the Netherlands' largest websites and business applications. That's one of the reasons why a platform like AMBER Alert continues to run while millions of people visit the website.

Data in the Netherlands

Most private clouds are located in the country of the hosting provider you're doing business with. This is a must for companies or organizations that work with sensitive data. A healthcare institution, for example, must store data in the Netherlands.

With a private cloud, the data remains stored in the country where the hosting provider is located.

Private cloud vs. on-premise differences

A private cloud vs. on-premise usually differs in terms of setup and configurations, network and infrastructure management, resource scalability, and cost difference (CapEx vs. OpEx). Here's a brief summary:

Setup and configuration

With an on-premise environment, a system administrator employed by your company must set up the server themselves. This means placing the server themselves, installing and updating an operating system, setting up and installing web server and database software, and taking care of security themselves.

The hosting provider takes care of this with a private cloud. The hosting provider has multiple specialists employed who handle all of this for you.

Managing infrastructure

In an on-premise environment, the system administrator is often also a network specialist because the infrastructure must be managed in addition to the server. This means that usually, this person ends up with all hardware-related issues, such as the purchase and maintenance of physical servers, switches, network cables, and server cabinets.

With a private cloud, the infrastructure is managed by the hosting provider or by the data center, where the hosting provider rents the data center space.

Scalability of resources

Adding new servers or other hardware (CPU, memory) usually must be done manually in an on-premise environment. A system administrator must add this manually.

With a private cloud, this can often be arranged via software. For example, via a self-service tool or via a ticket system. The hosting provider ensures that the new resources are added. Often automated, so it is more efficient.

Difference in costs

With on-premise, the costs are often one-time and can be calculated well in advance (CapEx). With a private cloud, the costs are variable and often on a monthly basis. You pay based on what you use (OpEx).

With a private cloud, more flexibility generally arises. If you temporarily need fewer resources, you can often determine this monthly. This creates more control over costs.

Conclusion

Companies often choose on-premise because they want control but often don't realize that there are also risks involved in managing it themselves or that they can actually save costs with a private cloud.

Companies that can't move software to the cloud yet can often also gradually move to a private cloud. Many possibilities exist to accommodate older legacy software to a cloud, such as with microservices. A private cloud simply opens many more doors and possibilities.