On-premise vs cloud: the differences to keep in mind and why integration is key to both

cloud vs on-prem

It won’t come as a surprise that the pandemic has changed the way we do business. 

More businesses moved their products and services online due to physical COVID-related restrictions over the last two years. But there are still many organizations out there that aren’t quite ready to take the leap to a fully cloud-based solution. Businesses in the banking and government space, or those with particular compliance and security needs, may prefer to keep some of their crucial applications managed on-premise. As a result, research shows that hybrid cloud strategies are on the rise with higher-than-expected cloud usage. 

As you are faced with having to change tack to keep up with demand and stay ahead of the game in your industry, how do you know what option is best for your business? Are you better off with an on-premise solution, a hybrid solution, or migrating all your systems, applications, and data to the cloud? 

To help make that decision a little easier, we’ll compare the key differences between on-premise vs cloud, including cost, security, and more. But let’s start by explaining the different terms.

Related: How to integrate legacy systems

What is cloud computing?

Do you write in Google Docs? Do you communicate with your team members via Slack or Teams? If you are, you’re working in the cloud. Accessing and storing data on the Internet is the key to cloud computing. It means you can get to your data and use applications from wherever you are. 

There are three different models; IaaS (Infrastructure-as-a-Service), PaaS (Platform-as-a-Service), and SaaS (Software-as-a-Service). SaaS is application software hosted in the cloud, accessible via the Internet or an API. PaaS provides an on-demand platform to software developers, so they don’t have to manage, develop, or run applications on an on-premise platform. And last, but not least, IaaS provides on-demand access to servers, networks, and storage on a pay-as-you-go basis.

What is an on-premise system? 

We’ve all received an email once in a while about software licenses at work being reviewed and subsequently upgraded or downgraded. Those software applications you use, like perhaps the Adobe suite or your organization’s accounting software, are being stored on your business’ servers. So what does on-prem mean? Exactly that—on-premise, or locally stored. An on-premise system retains all its processes, services, and data on local servers within your organization. 

Your IT team is responsible for maintenance, security, deployment, future-proofing, and anything else that the on-premise systems require to make them suitable for the business’ needs and changing requirements. A benefit of keeping systems on-premise is complete control—over everything from cost, access, and deployment to security, compliance, and improvements—but the downside is that the upkeep of all applications and systems can be very labor-intensive.

Related: An overview on cloud-to-cloud integration

What is a hybrid cloud environment?  

If you store some of your data and applications on-premise, while others are in the cloud, you’ve got yourself a hybrid cloud environment. This approach integrates public cloud services, private cloud services, and on-premise infrastructure to provide a flexible, distributed computing solution tailored to an organization’s needs.

For example, your organization may have some of its major data applications such as accounting systems or customer databases hosted on-premise, while cloud-based software such as Teams or Slack is used for remote communication between employees. Some of the benefits of a truly hybrid cloud are:

  • Higher developer productivity

Instead of developing code and software, and having to deploy to each instance individually, a hybrid cloud platform enables teams to develop and deploy to the cloud at once. Agile and DevOps methods are also easier to incorporate in a hybrid cloud environment.

  • Better infrastructure efficiency

Teams can optimize the time spent across different cloud services (private and public) and vendors. Applications can be optimized faster and data connected to cloud and on-prem services more efficiently if applications are integrated. 

  • Improved security and compliance

You can pick the best-of-class security and compliance technologies and consistently implement them across all your environments.

  • Business growth

A hybrid cloud environment allows for shorter product development cycles, increased innovation, faster time-to-market, and delivery of applications.

Research has shown companies gain up to 2.5 times the value from a hybrid multi-cloud (meaning the organization uses more than one public cloud provider) compared to a single-cloud, single-vendor approach.

Related: What is a one-way sync? And how can you use it?

Key differences between on-premise and cloud 

In addition to the foundational differences between on-premise and cloud, there are other aspects to take into account before making a decision on which suits your business best. There isn’t a one-size-fits-all approach, and what is best for your organization comes down to many different factors.

Let’s run through the pros and cons of each option step-by-step, from cost, security, and deployment to maintenance, accessibility, and scalability.


  • On-premise: You pay upfront for your licenses with a higher initial investment, but over the course of an application’s life cycle, the total cost is usually lower than if you pay for cloud-based software.
  • Cloud: The initial cost of set-up is usually less than on-premise because you pay as you go, and only for what you need. However, the long-term cost can be more expensive over the course of an application’s life cycle. 


  • On-premise: If your organization operates in the space of government or banking, you have certain regulations in place around security and privacy. While some cloud providers have created their environment specifically for these industries, you’re still relying on a provider outside of your organization to tick all the security and compliance boxes.
  • Cloud: With your applications on cloud, you get a full backup of data and operating systems. But security on cloud remains a problem, and many major breaches have happened over the past few years. For example, Microsoft’s internal support analytics database was compromised in 2019, impacting 250 million records including email and IP addresses.


  • On-premise: Each application you require needs to be installed on a physical server, and on your employees’ PCs or laptops.
  • Cloud: Cloud-based software is deployed in a few hours (or days at most) over the internet, so it’s a significantly quicker deployment cycle.


  • On-premise: You have complete control over configuration, upgrades, and system changes as your data, hardware, and software platforms are owned by you. This also means that you are fully responsible for the upkeep, security, and future-proofing. 
  • Cloud: Upgrades and maintenance are the responsibility of the cloud provider, so you don’t have to worry about anything.


  • On-premise: You have to be connected to your server to access on-premise applications, so overall it’s not as accessible as a cloud-based solution. The upside is that you’re not reliant on connectivity to access applications.
  • Cloud: You can access your applications anywhere, anytime from a browser as long as you have a reliable internet connection.


  • On-premise: You usually have to pay for a set amount of licenses upfront, no matter how many of those you end up using. If you need more licenses, the time to roll them out takes longer because they need to be installed on individual laptops or PCs.
  • Cloud: Cloud is more flexible because you only pay for what you use. It’s easy to up or down-scale licenses to meet demand, allowing for increased agility. 

The importance of integrating on-prem and cloud apps 

You may decide that a hybrid solution is the best option for your business. You move some of your applications to the cloud while keeping others securely on-premise. If this is your approach, make sure to integrate on-prem and cloud apps so that you can keep your data in-sync across the board. Application integration is different from data integration, which is the process of collecting data from several source systems and organizing them in a centralized location. 

The benefits of integration are seemingly endless: it fosters healthy collaboration across lines of business, prevents costly errors, boosts employee productivity, and lifts their experience—all while letting you hold onto valuable legacy systems and adopting new technologies. 

Workato, the leader in integration-led automation, offers a platform that allows IT and lines of business to build integrations between apps, on-prem systems, databases, etc. without having to write a single line of code. 

You can learn more about Workato by scheduling a demo with one of our automation experts.