The Surprising Benefits of On-Premises Infrastructure

What You Need to Know

Many believe that cloud servers are always the best and most modern choice for server infrastructure. However, on-premises solutions still offer significant advantages over the cloud, making them a better fit for certain needs.

• Compliance Control: Organizations in highly regulated industries can maintain complete control over their data, ensuring they meet specific compliance requirements.
• Specialized Software Performance: On-premise servers can be configured to deliver peak performance for specialized, resource-intensive applications, providing a level of customization not always available in the cloud.
• Data Processing Speed: With on-premises servers, data is processed locally, eliminating the latency that can occur when transferring large amounts of data to and from the cloud.
• Predictable Costs: Unlike variable cloud computing costs, on-premises solutions offer a predictable expense model, making budgeting and long-term financial planning easier.
• No Data Download Costs: Cloud providers often charge fees for downloading data, also known as "egress" fees. With an on-premises solution, you avoid these unpredictable charges entirely.

When your on-premises server reaches the end of its useful life, the critical decision is to either replace it with another physical server or migrate to the cloud. While Managed Service Providers (MSPs) often advocate for cloud adoption, there are specific scenarios where it may not be the best solution.

At their heart, cloud-based servers and on-premises servers represent two fundamentally different approaches to managing an organization's computing infrastructure. The choice between them impacts everything from cost and control to scalability and security.

Durham Medical Group is currently at a crossroads regarding this decision. Several years ago, a cloud migration was recommended and was the anticipated course of action when their current server reached its end-of-life. However, a recent, more in-depth evaluation has led them to conclude that an on-premises solution might be more suitable.

Benefits of Cloud Servers

Cloud-based servers are virtual servers hosted by a third-party provider and accessed over the internet. Instead of owning and maintaining physical hardware, organizations rent computing resources as needed.

Key benefits:

• Scalability: Cloud environments can quickly and easily scale resources (processing power, memory, or storage) up or down based on demand, offering immense flexibility for fluctuating workloads. ‍
• Flexibility: Users can access their data and applications from virtually anywhere with an internet connection, enabling remote work and distributed teams. ‍
• Accessibility: Data and applications hosted in the cloud are highly accessible, allowing users to connect from various devices and locations.

Cloud services typically operate on an operating expense (OpEx) model, meaning you pay for resources as you consume them, often through monthly or annual subscriptions. This shifts costs from large upfront investments to predictable ongoing expenses.

Benefits of On-Premises Servers

In contrast, on-premises servers are physical servers owned, managed, and maintained directly by an organization. They are housed within the organization's own facilities, such as a data center or server room.

Key Benefits:  

• Direct Control: Organizations have complete and direct control over their hardware, software, security, and data. This can be critical for businesses with specialized software, strict regulatory requirements, or unique security needs. ‍
• Physical Security: The organization is solely responsible for the physical security of the servers, including environmental controls, access restrictions, and disaster recovery planning. ‍
• Predictable Performance: On-premises servers can offer superior and more consistent performance, especially for applications requiring high bandwidth or low latency. Furthermore, certain specialized line-of-business software is engineered to operate most efficiently when hosted on local servers.

On-premises solutions typically involve a capital expenditure (CapEx) model, requiring upfront investments in hardware, software licenses, and infrastructure. But they lack the variable monthly expenditures associated with cloud-based servers. For organizations with long-term, consistent needs, this can lead to lower total cost of ownership compared to the accumulating monthly fees of cloud services.

What Option Should Durham Medical Group Choose?

Durham Medical Group has received recommendations for both cloud and on-premises solutions, with the cloud often perceived as the more modern and current choice. This naturally leads to the question: are on-premises servers truly outdated, and are they inherently more expensive to acquire and maintain in today's IT landscape?

Strict Regulatory Compliance  

Durham Medical Group operates as a HIPAA-compliant entity, mandating strict adherence to regulations governing the collection, storage, and processing of patient data. The sensitive nature of this information means that any misuse or breach could lead to severe legal penalties and significant reputational damage.

An on-premises approach offers an advantage over cloud-based solutions. When your data resides within your own physical infrastructure, you gain granular control over its exact location and who can access it. This level of oversight is invaluable for demonstrating compliance during audits. You can physically point to where your servers are, dictate the security protocols in place, and easily provide evidence of adherence to specific regulatory requirements.

Score 1 for the On-Premises Server.

Specialized Hardware & Customization

On-premises environments are often the only solution for niche applications that may not be optimized for, or compatible with, cloud environments. This can include proprietary legacy systems that rely on outdated hardware interfaces, highly customized development environments with unique dependencies, or highly specialized scientific simulations.  

Durham Medical Group uses specialized software that sends reminders to patients and helps them follow specific protocols for their care. This software does not function as expected in a cloud environment

Attempting to force these workloads into a public cloud can lead to significant performance bottlenecks, compatibility issues, or simply be cost-prohibitive due to inefficient resource utilization.

Score 2 for the On-Premises Server.

Long-Term Cost Predictability for Stable Workloads

Durham Medical Group has consistent, predictable server demand, with no plans for significant growth. For this reason, the financial model of on-premises infrastructure presented a more favorable outlook.  

Rather than the fluctuating operational expenses (OpEx) of cloud subscriptions, on-premises involves an initial capital expenditure (CapEx) for hardware, software, and setup. This CapEx, while a larger upfront investment, can be amortized over time, providing a clear and predictable depreciation schedule.

This predictable cost structure allows for more accurate long-term budgeting and avoids the potential for unexpected spikes in cloud bills due to unforeseen usage patterns or pricing changes. There are more upfront costs, which can be an issue for some companies, but Durham Medical has the funds for the initial outlay. This makes an on-premises server an attractive option.

Score 3 for the On-Premises Server.

Data Volume & Download Cost Concerns

When evaluating server solutions, the volume of data and associated download costs are important to consider. Cloud providers commonly impose egress fees for data transferred out of their networks. For organizations managing petabytes of information or requiring frequent, large data transfers, these charges can quickly escalate into substantial and unpredictable expenses.

Conversely, maintaining data within your own data center eliminates these egress fees. This offers a significant cost advantage for entities engaged in scientific research, managing extensive media archives, or conducting intensive big data analytics, allowing them to store, process, and retrieve massive datasets. Once the initial investment is made, the cost of managing an on-premises storage infrastructure remains relatively stable, providing a clear financial benefit compared to the variable and potentially high egress costs associated with large-scale cloud data operations.

Durham Medical Group does not have large data volumes, making egress fees a non-factor in their decision. However, for businesses that do handle significant data volumes, this consideration is paramount.

No Score for the On-Premises Server.

The Decision

The allure of cloud computing's scalability and flexibility is undeniable, but the optimal server solution is not a one-size-fits-all proposition. As Durham Medical Group's evaluation demonstrates, on-premises servers continue to offer compelling advantages for organizations with specific needs, particularly concerning strict regulatory compliance (HIPAA in this case). Ultimately, the decision hinges on a thorough understanding of an organization's requirements, proving that the "modern" solution might still be found right at home.

If you are looking for an MSP that works to understand your needs and provides recommendations that are in your best interest, give our IT experts a call!

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More Reading:

Why You Don’t Need Another On-Prem Server
How to Harden Your Server for Long-Term Security
Why Partnering With an MSP Can Be Your Game-Changer