Is Cloud Cheaper than On-Prem?

Table of Contents

Is cost a major concern when it comes to decision-making? When deciding among several options, the cost is undoubtedly a crucial concern, as it is with most business decisions. Similarly, acknowledging the cost difference between cloud and on-premise IT services is essential for your IT systems. This article will shed light on why cloud-based computing is a more affordable option for most organizations.

Cloud vs. On Premise

The amount you spend on cloud and on-premise infrastructure is determined by various factors. As a result, there is no definitive answer to which environment is the cheapest. Cloud premise services may be less expensive depending on the requirement of the company. There are also instances where the on-premise is less costly. However, most firms find that the cloud costs less than its rival. What are some of the factors that lead to this?

No Hardware Repairs and Replacements

One of the things that makes the cloud less expensive than on-premise hardware is that you don’t have to replace or repair physical hardware infrastructure. If you use on-premise, your hardware may need to be replaced every few years. As technology evolves, businesses must upgrade to remain competitive. New servers include the most recent improvements as well as increased performance capacity.

To avoid equipment failure, a company has to replace its servers. Older servers are inefficient, have a higher risk of failure, have various downtime drawbacks, and make a loss. However, you won’t have to worry about such charges if you use the cloud. You also do not have to worry about frequent server repairs.

No Software or Hardware Upfront Costs

Another financial advantage of using the cloud is not having to make a huge upfront outlay for your software or physical hardware infrastructure systems. Instead, you rent the physical hardware infrastructure system and pay a monthly subscription price that is significantly lower. Because of the changing cost structure, you can spend your money more intelligently.

If you don’t need to invest much in your server in advance, you can put your money towards marketing or R&D instead. These investments can help your company grow and consequently create more money. The same can be said about server licensing. In the classic On-premise environment, a server license is purchased ahead of time. This is typically quite costly.

Some license costs are included in your invoice when you utilize the cloud. Similar to infrastructure, this implies that you should choose to lease a license instead of purchasing one eventually. As a result of the lower capital expenditure, you may put more money into other aspects of the company to help it thrive.

Downtime and Productivity

Productivity and downtime costs are expenses that are difficult to quantify but are nonetheless significant. Disruptions and other technical glitches do not affect cloud providers, whereas on-premises services incur more downtime on average. It is the main motivation for businesses to choose the cloud to minimize the risk of downtime. Cloud providers use a failover method to assure business continuity and cover all repair costs.

Cloud companies have begun to work on service delivery and connectivity with legally binding service level agreements. They are also addressing how to compensate clients in the event of shortages. However, when adopting cloud storage, you should conduct a risk analysis that incorporates the cost of your company’s downtime. Although cloud storage isn’t risk-free, it doesn’t cost your company anything to rectify it.

Cost Savings

Another key feature contributing to cost reductions in the cloud is that you will only pay for what you use. This isn’t always the case with a server. A server has a limited amount of storage and availability, and after you’ve reached that limit, you’ll need to acquire another server to enhance availability or storage. Consider the case where your existing servers are nearing capacity.

Assume your marketing team launches a promotion that results in a big increase in traffic. Because your present servers are already at capacity, you won’t be able to accommodate these additional users. So, what are your options? You’ll need to purchase a new server to accommodate the increased availability.

Not only does this consume time and money, but what will happen when the campaign ends and traffic volume returns to normal? You might be using a little portion of the new server’s resources, but most of it sits unused. This is a regular occurrence for firms that experience seasonal traffic or are expanding. You can scale up or scale down as needed using the cloud, and you only spend for what you use. This enhances cost savings.

Maintenance Cost

Other maintenance expenditures connected with on-premises infrastructure are handled by IT professionals. Physical hardware infrastructure physical upkeep. Someone needs to check that everything is in working order and fix any issues that may arise.

If you have equipment on-premises, your IT personnel will likely spend significant time on these activities.

Moving to the cloud, on the other hand, eliminates these obligations. This implies fewer IT teams are required, or more time may be spent more effectively and efficiently in the business. IT workers being able to concentrate on more visible or proactive projects increases technology execution and overall organizational efficiency.

Start filling your sales pipeline today

Some Drawbacks of Cloud Computing

The cloud is not without flaws despite its numerous benefits. If you’re thinking about shifting your business to the cloud, you should look out for these problems.

Security Level

One of the most concerning things about the cloud is its privacy and security protocols. You entirely entrust our data’s integrity and confidentiality to the organizations that provide cloud computing servers when you utilize cloud systems. This means that you cannot sue the system for data mistakes in case of any security breaches.


As previously stated, if you use the cloud, you must rely on your cloud hosting company to keep your system up and ensure they are operational. Cloud providers may, however, let you down from time to time. Outages are uncommon for cloud services, but they do happen. There’s nothing you can do about this when it happens. This is the cost of not having to bother about infrastructure management. You have little influence over your surroundings. Although downtime should not stay long, it may cost your company money regardless of its duration.

Low Connections

If there is an intermittent or especially slow connection, the cloud won’t work. The quality of cloud servers is one of the most significant factors to examine before deciding on cloud server services. You will be greatly disadvantaged due to poor server reliability.


In general, most organizations are saving money by using the cloud. And given the criteria mentioned in this article, it’s easy to see why. Unrestrained spending and cloud outages, on the other hand, can result in downtime. If you’re thinking about migrating to the cloud to save money, make sure you’re aware of both its benefits and drawbacks. For exceptional lead generation for your company, you should consider kennected. We are a SaaS (software as a service) company that offers the best-in-class LinkedIn automated prospecting tools for lead generation like Cloud Kennect and Kennected Video.

There’s no better time than now to get started with Kennected for all your online marketing and lead generation needs.

Schedule a Demo -
Grow Your Business

Subscribe For

Get started with Kennected today!