Cloud vs On Premise: How the scales are weighted

cloud vs on premise

In today’s digital world, businesses are facing a big decision: should they move their mission-critical applications to the Cloud, or keep them in-house, on-premises? The Cloud can offer some great benefits like flexibility, security, and scalability, but some organizations still prefer to keep things on-premises because of control and cost concerns.

Within this blog, we’ll take a closer look at the benefits of Cloud hosting, drawing upon a use-case scenario to assess each side of the argument, while offering some tips for CIOs currently stuck in the middle.

Learn from those who have been through it

More and more organizations are migrating their mission-critical workloads to the cloud. However, some remain hesitant, choosing to manage and host their workloads on-premises. Companies often don’t realize until it’s too late is that this approach can present its own set of challenges around cost, security, and scalability.

To demonstrate, we’ll refer to the use case of a large manufacturing company that continued to host its SAP workloads locally for cost and control reasons. The company had been using its SAP systems for several years and was planning to move to SAP S/4HANA.

Now, it’s a common belief amongst CIOs that hosting SAP workloads locally is more cost-effective and will give the company more control. However, as the manufacturing company discovered, managing and hosting on-premises workloads is not as easy as many first imagine. The move to SAP S/4HANA migration required new hardware, which added to the company’s already considerable capital expenditure. They also faced security and scalability issues that could have been avoided if they had opted to run their SAP systems on the Cloud.

For example, the team needed to ensure that sensitive business data was protected. They soon discovered that managing and maintaining the security of on-premises systems posed a significant challenge. They needed to invest in additional security measures, such as firewalls and intrusion detection systems, while also keeping their systems updated with the latest security provisions.

There was also the issue of scalability. As the manufacturing company grew and its workload increased, it found that its on-premises systems struggled to keep pace. It needed to invest in additional hardware and infrastructure to meet growing workload demands. This led to significant capital expenditure, project delays and maintenance costs.

Had the company chosen differently and migrated its SAP systems to the Cloud, it would have benefited from the flexibility and scalability offered by Cloud hosting. It could increase or decrease their workload according to their needs, paying only for the resources consumed. It would also benefit from security measures and compliance certifications provided by cloud service providers.

In summary, the manufacturing enterprise scenario highlights the challenges that organizations face when hosting SAP workloads on-premises. While this may seem like a cost-effective, control-focused solution, it can present a host of security and scalability challenges.

Cloud vs On Premise

So far, we’ve barely scratched the surface of what is involved in the Cloud versus on-premises hosting debate. In addition to the points above, here are a few other considerations for why organizations should consider their options carefully.


Although the initial investment for an on-premises SAP deployment may seem low, it is important to consider the ongoing investment in hardware maintenance and upgrades, as well as the cost of hiring IT staff to manage it. In contrast, Cloud solutions offer predictable subscription-based pricing models that include upgrades, backups, and support as part of the package. Additionally, managing SAP workloads in the Cloud helps reduce costs associated with purchasing and maintaining new hardware for upgrades or migrations, such as moving from SAP ERP to SAP S/4HANA.


One of the main concerns of any business using SAP workloads is data security. While on-premises solutions can provide more direct control over security protocols, Cloud providers can maintain strong security measures, including encryption and multi-factor authentication. Cloud providers often have more resources and expertise than individual companies to devote to security, especially when it comes to complying with industry standards such as ISO 27001 and SOC.


For companies with mission-critical SAP workloads, availability is key. On-premises solutions may be subject to downtime due to factors such as hardware failures or power outages. Cloud providers, on the other hand, often offer strong uptime guarantees as part of their service level agreements (SLAs). This means businesses can have near-continuous access to their SAP workloads without having to worry about maintaining expensive backup systems or redundant hardware.


As the business grows, it is important to have scalable solutions for SAP workloads. On-premises solutions can be limited by physical hardware, which makes deploying additional capabilities or features difficult and expensive. In contrast, Cloud solutions are designed to be highly scalable, allowing businesses to easily add or remove resources as needed, often on a pay-as-you-go basis.


A key enabler of Cloud infrastructure is automation which can help businesses to get the most out of their SAP systems in the Cloud. By automating routine tasks, organizations can improve efficiency, reduce costs, and increase security, making it easier to scale and manage their SAP workloads in the cloud.


The benefit of running workloads on the Cloud is the ability to access them from anywhere using any device with an internet connection. This is especially important for companies with remote or distributed teams, or who need to provide partners or customers with access to SAP workloads. With on-premises solutions, access is often restricted to a limited number of devices in the physical office, making it difficult to work remotely or collaborate effectively.

In conclusion, while CIOs may find it more manageable to host SAP workloads on-premises from a cost and control perspective, there are many compelling reasons to consider a move to a Cloud-based solution in order to better meet their changing requirements.

Related Content