Why Companies Are Moving Back to On-Premise From the Cloud

The past few years have made cloud computing an undisputed king of IT infrastructure in business. Companies flocked to the cloud for cost-efficiency, scalability, and flexibility. The online survey portals show that the cloud adoption rate among enterprise organizations is over 94 percent. This is indeed a great adoption rate, and it's also being noted that the cloud computing market will be worth around $832.1 billion by 2025. 

Despite such a great cloud computing adoption rate, a counterintuitive trend of moving back to on-premise from the cloud has emerged. Yes, this is true. Many companies have decided to reevaluate their strategies and get back to the on-premise solutions. This shift has raised some questions in everyone's mind. 

So continue reading this blog and discover why companies are moving back to on-premise from the cloud. We have also included a comparative analysis of cloud vs. on-premise to help businesses make the right decision.

Top Reasons For Moving To On-Premises

Reason 1: Security Concerns

In recent years, high-profile data breaches and security incidents have overshadowed the cloud. While cloud providers focus on and invest strongly in security measures, the complexity and cloud environments make them easy targets for cyberattacks. Due to this reason, some businesses are reevaluating their data security posture. 

The on-premise working model provides better control over data security and compliance. Companies can implement tailored security measures and encryption protocols to safeguard sensitive information.

Reason 2: Cost Considerations

Initially, the cloud computing model promised cost savings with its pay-as-you-go model, but many companies struggled with unexpected expenses. The metered pricing model can lead to budget overruns, especially when usage spikes unexpectedly or data storage needs grow exponentially. Some businesses have faced budget overruns of up to 40 percent in the past few years. Many times, ongoing subscription costs also accumulate over time. 

The on-premises model requires upfront capital investment, although this can be more cost-effective in the long run for organizations with more predictable or stable workloads. It helps eliminate sudden budget overruns plus allocates resources based on the company’s anticipated needs.

Reason 3: Compliance and Data Governance

Stringent regulatory requirements — such as GDPR, HIPAA, and industry-specific compliance standards — mandate businesses to maintain strict control over their data. Sometimes, navigating these challenges for the service prospects is difficult because it involves third-party providers to meet compliance requirements. 

This is different with on-premise solutions; there is more control and transparency. Organizations can tailor their infrastructure to meet compliance needs without relying solely on cloud providers' assurances.

Reason 4: Performance and Latency

Some applications require low-latency responses or intense computational power and often experience performance bottlenecks in a cloud environment. Running such workloads on-premises outperforms shared cloud infrastructure for latency-sensitive tasks. Dedicated hardware and network resources are available to provide the necessary performance assurance in all situations.

Cloud vs. On-Premise: A Comparative Analysis

After understanding the major reasons behind switching back to on-premise from cloud computing, it’s time to examine the major differences between them. Below, we have done a comparative analysis. Take a look:

The Key to Choosing Between Cloud Computing and On-Premises

As we have read above, cloud computing and on-premises have their strengths in different situations. But when choosing between two, or if you get confused, question yourself on the following areas. It will help you make a better decision for your business.

When Should You Choose an On-Premise Solution?

1. When you have highly sensitive data like healthcare or financial records, on-premise offers greater control and security, reducing the risk of unauthorized access or data breaches.
2. If the business has stable workloads with consistent resource needs, on-premise seems more cost-effective in the long run.
3. In industries with strict compliance regulations, on-premise solutions provide better control over compliance measures, allowing you to tailor security and access controls to industry-specific standards.
4. On-premise is better suited for industries with strict compliance regulations because there is better control over compliance measures. 
5. When heavily reliant on legacy systems, on-premise solutions offer a smoother integration process.
6. When data residency laws mandate storing data within specific geographical locations.

When Should You Choose a Cloud Computing Solution?

1. Better for businesses with fluctuating workloads that require rapid resource scaling, cloud computing allows you to adjust resources up or down as needed quickly.
2. Businesses with variable workloads can benefit from cloud solutions, paying only for the resources used and effectively minimizing costs.
3. Cloud computing offers built-in redundancy and disaster recovery capabilities that are challenging and expensive to replicate on-premise.
4. For businesses with a global presence or remote teams, cloud computing's remote accessibility fosters efficiency and collaboration across borders.

Concluding Thoughts

Several key factors are driving some companies' shift from the cloud to on-premise solutions. Security concerns, cost considerations, compliance, and more have led these organizations to reevaluate their IT infrastructure choices.

But still, the decision between cloud computing and on-premise solutions should be based on each organization's specific needs and priorities. The ultimate choice depends upon organizational needs that vary over time.