New-age technologies such as big data analytics, artificial intelligence, and cloud computing, amongst others, are rapidly increasing the rate of innovation and changing how enterprises work with data. Cloud computing, in particular, has proven to be a big boon for firms since moving business-critical workloads to the cloud can enable greater flexibility and scalability. According to Gartner, 51% of IT spending in application software, infrastructure software, business process services and system infrastructure will have moved from traditional solutions to the public cloud by 2025, up 10% compared to 2022, and almost two-thirds of spending on application software will be directed towards cloud technologies.
Compared to on-premises computing, cloud-based technologies have been praised for helping enterprises significantly improve time and cost savings while reducing the impact on IT administration. However, recent concerns surrounding the cloud, such as expense, along with performance, security and regulatory compliance, have sparked a debate amongst businesses, causing some to reevaluate their decision to move their data to the cloud.
Cloud or on-premises: What to choose?
Given the pace of technological innovations, businesses now have a plethora of options for deploying and expanding their operations. But the question of cloud versus on-premises should really start with an assessment of the business needs and application performance requirements.
For businesses with changing or expanding bandwidth requirements, cloud-based services are typically a good fit. And recent research from KPMG indicates that 42% of executives believe that flexible work is the main benefit of cloud computing.
However, economic uncertainty is leading many companies to employ spending gates to limit their expenses per quarter, while others are looking at tech stack ROI with greater scrutiny than previously before. A key component of the cloud is the diverse ways in which various providers price their offerings. Some might be cheaper up-front but are more likely to incur additional costs over time, while others might seem more expensive to begin with but come with services—such as remote database administration—that can help businesses save money in the long run. When consistent revenue isn’t guaranteed and the economic landscape feels volatile, it’s natural for enterprises to tighten budgets and expect guaranteed returns before investing in new cloud solutions. Given the higher costs associated with the cloud, some businesses are moving workloads back to on-premises servers to have total control over their infrastructure.
Nonetheless, given its scalability, agility, flexibility, and security, many businesses continue to use cloud computing. To ensure the best possible resource allocation in the cloud, business leaders are looking for cloud FinOps techniques to update existing budget processes. Comparing platforms can be challenging due to the vast differences in pricing structures between suppliers. But determining the company’s requirements and usage patterns is crucial.
Cloud and on-premises are both viable solutions, but the decision will depend on how well you can estimate the performance needs of various applications and keep track of workloads across the board. There are certain situations where some applications might not be a good fit for the cloud, and the same goes for on-premises.
The future in the hybrid cloud
Rather than go all-in on-premises or in the cloud, many IT leaders are opting for a hybrid cloud approach. The hybrid cloud unifies public cloud, private cloud and on-premises infrastructure to build a single, flexible, cost-optimal IT infrastructure. It serves as a means for businesses to cut costs, lower risk, and increase their current capabilities to assist efforts related to digital transformation. According to a study by Statista, the worldwide hybrid cloud market will grow from an estimated $85 billion in 2021 to $262 billion in 2027. The Asia Pacific area is anticipated to develop at the fastest rate during this time. This data hints that the adoption of hybrid cloud is anticipated to rise, given the cost-effectiveness, scalability, and security it delivers.
All things considered
The choice of cloud or on-premises differs from business to business. Assessing the performance needs of various applications and keeping an eye on workloads in both settings is crucial to make the right decision. Businesses can achieve cost-efficiency as they grow—without compromising essential capabilities—by implementing FinOps practices which include conducting the necessary research, evaluating the available options, and working with the financial, development, and IT teams to select the best database solution.