Cloud Computing vs. On-Premise Solutions: What’s Best for Your Business?
Over the last decade, the rise of cloud-based services has been nothing short of meteoric. Gartner predicted that global public cloud spending would exceed $700 billion in 2025 and that by 2027, 90% of organizations will be using some form of cloud technology in their operations. These remarkable figures indicate the almost universal conviction that cloud computing can benefit small and big businesses alike.
At the same time, certain sectors have been slow to catch up. In healthcare, the adoption of cloud services was slower. It grew at half as fast as other industries. It illustrates that many companies still prefer on-premise solutions’ reliability and predictability.
Given this landscape, it’s worth exploring the two options in more detail. What is the key difference between on-premise and cloud solutions? And which is more appropriate for healthcare providers and homecare companies? Let’s explore.
Understanding Modern Cloud Computing Solutions
Cloud computing has recently enjoyed popularity. But it’s been around since the late 1990s and early 2000s. Companies like Salesforce and Amazon were early adopters. They figured out how to use the internet to deliver software to end users.
Today, organizations have access to more advanced versions of these cloud-based services. They can store data and run applications without overloading internal servers. Small businesses don’t have to buy servers, storage, or networking and security technologies. Providers install, operate, and maintain the hardware off-site.
With that said, there are a few different solutions offered by cloud providers. Companies can choose between private clouds and public clouds. Meanwhile, hybrid clouds offer a combination of the two. Providers usually offer one of these three cloud services:
- Infrastructure-as-a-Service, or IaaS
- Platform-as-a-Service, or PaaS
- Software-as-a-Service, or SaaS
The healthcare industry generally uses cloud technology to store crucial health records. This solution enables authorized providers to access data anywhere and at any time. As a result, health facilities enjoy greater collaboration and streamlined compliance.
Why Some Companies Prefer On-Premise Solutions
In contrast, on-premise solutions are more traditional options. Some companies continue to invest in massive in-house IT infrastructure. This includes server hardware, software licenses, and professionals who manage such systems.
Companies with on-premise software and hardware usually consider them dependable options. If proper hardware and software are installed, the on-premise infrastructure minimizes latency that could occur on the internet-based systems. This feature is crucial for real-time operations, such as radiology imaging, surgical robotics, and high-frequency financial transactions.
Organizations with highly specialized workflows or government agencies might find on-cloud solutions too rigid and exposed. In this case, convenience is sacrificed for having regulatory sovereignty, complete security control, full visibility into their data, and a high level of customizability. Understandably, the price for these more demanding standards is significant. Between the installation and maintenance of on-premise solutions, costs could be much higher.
Benefits of Cloud Computing Vs On-Premise Solutions
In the healthcare industry, on-premise solutions have long been the preferred option, as they are associated with greater security and control. However, modern custom solutions and integration in cloud infrastructure have addressed such concerns.
As a result, cloud-based services have emerged as the clear winner. Here are some of the major benefits of cloud computing for small businesses.
Lower Upfront and Maintenance Costs
As mentioned, on-prem solutions entail a massive upfront investment. Purchasing hardware and other infrastructure puts a significant strain on budgets. But that’s only one aspect of it.
On-premise solutions also rack up maintenance costs over time. They need the considerable space and expertise required to keep them running. Moreover, the cost of acquiring new systems adds to this figure. Additionally, cyberattacks, or system malfunctions, could cripple an organization’s finances.
When it comes to expenses, cloud-based services have lower upfront costs. Most cloud services operate on a subscription-based pricing model. Organizations can subscribe and opt out any time they like. Meanwhile, the provider looks after all the maintenance and software updates.
| Factor | Cloud Computing | On-Premise |
| Upfront Investment | Low (subscription-based) | High (hardware, licenses) |
| Maintenance Costs | Included in provider’s service | High (IT staff, software updates) |
| Scalability Costs | Pay-as-you-go model | Requires hardware upgrades |
| Security Costs | Managed by the service provider | Managed in-house |
| Long-Term Costs (5+ yrs) | Continuous yet predictable expenses | Expenses might be lower after the initial investment (only if no repairs/upgrades are required) |
Flexibility and Scalability
Cloud solutions excel in this aspect as well. Third-party providers are responsible for hosting infrastructure. Companies only pay for the services they actually use. This solution offers operational flexibility. It’s particularly relevant for small businesses that don’t need massive networks and hardware.
The benefits of virtualization in a cloud environment include greater oversight and control. IT teams can deploy, maintain, and track several virtual environments. This is all accessible from a centralized dashboard. They also don’t need to buy and deploy physical servers.
Moreover, teams can adapt to various needs and requirements with minimal investment. The scalability of cloud computing helps businesses handle seasonal demand and limited budgets.
Data Backups and Recovery
Virtualization is among the benefits of cloud computing in healthcare and other sectors. Providers create several virtual machines that operate in secure, isolated environments. This improves data security since security breaches or malware will only affect one machine.
Cloud service providers also conduct robust data backup and disaster recovery protocols. The practice involves copying across various data centers. Hence, systems can recover if a malfunction or natural disaster occurs. In contrast, on-premise backups to remote centers are often costly and complex. According to the CDW’s survey, sixty-three percent of healthcare organizations regard reliability and recovery as the biggest benefits.
Security and Compliance
Security remains one of the biggest hindrances to cloud computing’s widespread adoption. Organizations, particularly those in sensitive industries, prefer on-premise technology because of its control. At least, that’s what 71% of healthcare organizations believe.
This is why dedicated software solutions are becoming prominent. Major cloud providers are investing in comprehensive security protocols. They are leaning on AI and machine learning for protection against cyber threats. These providers have an easier time adopting security best practices than in-house teams. Cloud-based services also offer greater support than on-premise solutions. For instance, the major benefits of AWS cloud computing include its immense infrastructure. Amazon Web Services has several safeguards that in-house teams cannot match.
Consider that the healthcare sector generated 2.3 zettabytes of data in 2020. It’s easy to see why it gradually leans towards relying on the unlimited memory storage and security benefits of cloud computing. The sector also depends on innovations that reduce silos and protect data privacy.
At the same time, dedicated third-party providers are compliant with various regulations. Healthcare providers must follow stringent HIPAA and international ISO guidelines. Hence, a provider with relevant safeguards can offer peace of mind.
Healthcare providers who opt for on-premise solutions have more control over their data. But they must also manage their own security and compliance measures during set-up. This is both costly and time-consuming.
A Clear Winner Emerges in Cloud Computing
Taking into account inconveniences associated with vendor lock-in, possible data breaches, and downtime risks, cloud computing still offers more flexibility, scalability, and security than on-premise solutions. The advantages of cloud computing are especially clear for modern dedicated services. It’s also more cost-effective and integrated with advanced technologies. This feature enables the continuous enhancement of its capabilities.
ISI Technology provides cloud-based software and products that optimize various operational aspects. This includes NEMT, healthcare, and homecare services. Get in touch to learn more. Discover how we streamline NEMT dispatching, insurance billing, and homecare services.