Cloud vs. on-premise solutions or how to navigate technology decisions

Are you planning to build or already running custom applications, software solutions or robust systems that have increased hardware requirements? If so, you've probably heard about the possibility of moving your applications and data to the cloud, a location offsite. When is a cloud solution really worthwhile and when is it just a marketing ploy that can be replaced by a cheaper and more efficient on-premise solution?

What is the cloud?

By cloud, we mean hardware and software resources that you can rent to run your own applications or other technology solutions for which your own facilities do not have sufficient capacity. The largest global providers of comprehensive cloud solutions are Amazon AWS or Microsoft Azure.

Benefits of cloud solutions

Cloud technologies bring a number of benefits for business owners. The biggest one is that you don't have to deal with the management and servicing of all the hardware - this is always taken care of by the cloud owner, who only lends you their resources. Another advantage of the cloud is its ability to scale according to the current needs of the project/application/business. This can be particularly beneficial for businesses with fluctuating demand that need to respond flexibly to market needs. For example, if traffic is expected to increase, cloud infrastructure can provide additional resources during peak periods.

One possibility is when people are building a simple application (e.g., proof of concept) but don't want to deal with scaling based on how many people will use it. At the same time, there are also large applications running in the cloud where several services are running in parallel and a lot of data is being processed, which the cloud can process. Thus, a cloud solution may be suitable for simple applications that are not computationally intensive, but are expected to grow dynamically in the near term.

What is on-premise?

An on-premise solution, unlike a cloud solution, is the hardware capacity of your own technology facilities. However, unlike a cloud solution, it lacks a software layer that can scale up and optimize capacity based on the current workload of the application being run.

Benefits of on-premise solutions

An on-premise solution can be a cheaper option for you if you put your project in the hands of experts who will build you a functional on-premise tailor-made solution. In this case, on-premise will be a cheaper option for you, even if you have to factor in the cost of the hardware as well as regular service and administration, i.e. the time of a dedicated employee. So, if you have more advanced technical knowledge or are surrounded by people who do, you can create a solution for your project that is tailored to your needs and you don't have to get caught in an endless cycle of paying for a cloud solution.

An on-premise solution is suitable for more complex applications for which a cloud sanctuary would not be possible due to various functional limitations while maintaining cost-effectiveness. We had to deal with such a situation, for example, in the case of the WebMedea project, which, due to its complexity, required such computing capacity that renting it on remote servers was not cost-effective.

Risks of a cloud solution

Cloud solutions may seem like the ideal solution for getting your project off to a fast start, but they also come with certain risks:

1. Cost

A danger especially for software companies can be entrusting your project to companies that offer to digitize their business with a cloud solution. In this case, it is not uncommon for companies to be pushed into such a solution under the pretext of an ideal solution. However, as is often the case, after a technical audit with our clients, we find that for their purposes we are able to put together a simple, yet functional on-premise solution, whose cost is a fraction of the price of the existing cloud solution.

2. Vendor lock-in

Once the different parts of an application are deployed to the cloud and separate fees start to be paid, reverting to an on-premise solution becomes difficult and costly. Companies may face a "vendor lock-in" effect, meaning they become dependent on a particular cloud provider, which can limit their flexibility and require additional investment when trying to migrate back or to a different platform. In some cases, breaking out of cloud jail is almost impossible.

3. Retention of sensitive data

For some industries, the cloud is already inherently unsuitable due to legislative obligations to retain sensitive client data. This may be the case, for example, for banking and non-banking institutions that must have maximum control over their clients' data and cannot afford to manage sensitive information in cloud storage.

Risks of on-premise solutions

In the case of an on-premise solution, you are building your project on your own, but even in this case you have to take into account several risks:

1. High upfront costs

Setting up an on-premise infrastructure requires a significant one-time investment in hardware and software. For smaller companies or startups, this expense can be very limiting and slow down their development. If a company's needs suddenly increase (e.g., growth in the number of users, data volume, or application load), an on-premise solution may not be able to respond flexibly without additional investment in new hardware and infrastructure.

2. The number of unreliable vendors

Implementing on-premise infrastructure is a complex process involving design, installation and configuration. But it also involves assessing whether building your own on-premise solution is appropriate for your project. There are a large number of companies in the market who are building on-premise solutions for anyone, regardless of whether using their own massive infrastructure is appropriate for their plans. Without finding a reputable vendor who will also partner with you in your business, you may fall prey to just such dubious companies.

3. The need for human capacity

On-premise solutions depend on the capabilities of the in-house IT team that has to take care of the operation, security and maintenance of the system. If a company is understaffed or loses key employees, it can be difficult to keep the infrastructure running smoothly.

TRITON IT solutions

Understanding the business is a key factor in our decision whether to use a cloud solution for your project or recommend building a bespoke on-premise solution. Only then can we tell whether on-premise technology makes both economic and technological sense, or whether it is better for your case to use one of the virtually maintenance-free cloud solutions on offer.

At the same time, we are able to build the on-premise solution so that the final product is fully owned by you and we continue to be involved only as technical and service support. As a result, we never tie our clients into a collaboration that they can't walk away from without losing some of the functionality essential to their business.

We offer our clients the use of our own server space, which we operate in the Tower data centre, owned by Czech Radio Communications and located in Prague's famous Žižkov broadcasting tower.

Artificial intelligence and cloud

You may have noticed the trend of combining cloud services with the phenomenon of artificial intelligence, i.e. AI. The available AI solutions of the current era operate as such "Cloud AI", which means that the effective functioning of AI, such as large language models, requires significant computing resources that only data centres provide. 

In this context, services are emerging that try to hide their dependency on these big AI models, but many of them are in fact just forwarding services of big companies (OpenAI, Meta) without any value added of their own, and only a handful run their own AI language model in the background of their application.

We at TRITON IT decided to take a different approach. Our team is developing a system that incorporates locally run AI models, allows flexible use of different AI models according to specific user requirements, and processes the data before it is sent to the AI. In this way, we avoid dependency on completely cloud-based solutions and provide more options for our clients.

Cloud vs. on-premise AI Status

Thanks to our membership in the Czech Association of Artificial Intelligence, we attended an event called AI Status in early February specifically on the topic of choosing between cloud and on-premise solutions. In addition to presentations by experts from Microsoft or SAS Institute, we also witnessed a moderated panel discussion, during which we learned about the direction leading Czech software companies are taking and gained valuable information about their decision-making processes on whether to choose cloud or on-premise solutions.

So should I choose a cloud or on-premise solution?

The decision between cloud and on-premise technologies should be based on each company's specific needs and goals. Careful design and, where appropriate, cost-benefit analysis can be the key to success in today's rapidly changing technology environment. Projects that carefully evaluate their options and stated goals will be better able to choose the optimal path for their development and innovation. And we at TRITON IT are ready to give you a helping hand in this regard.