Cloud vs. In-House Servers: What is the Best Choice?

Aftab Alam
Executive Vice President, Product Management

According to Statista, IT professionals worldwide estimate a near 50/50 split between onsite and cloud-hosted servers at their organizations in 2024. That makes sense because each has a place and a purpose within your IT infrastructure. With massive amounts of data to manage and the advent of AI generating even more data—and requiring more servers—choosing where to invest your IT dollars isn’t straightforward.

The global public cloud services market will grow by over 20 percent in 2024 to $679 billion. Much of that spending will be for data storage ($117 billion in 2024) and infrastructure services ($78 billion in 2023). Meanwhile, the global server market is growing nearly 6 percent this year to about $96 billion

These statistics clearly show that cloud server solutions and physical servers both have a place within your infrastructure. That begs the question: How do you determine where to put your IT dollars to get the best return on your server investments? 

Start With a Cost-Benefit Analysis

Conducting a cost-benefit analysis is crucial for determining the optimal allocations of resources between cloud-based servers and onsite servers. This analysis needs to consider direct and indirect costs, such as initial investments (CAPEX), operational expenses, scalability, and the potential impacts on operations and revenues of each option.

Evaluating these factors helps you make informed decisions aligned with your IT budget, operational requirements, and long-term objectives. You also need to consider future growth and the ability to adapt as your needs change. Let’s look at the cloud vs. physical servers. 

Cloud Servers vs. Physical Servers: Pros and Cons


Advantages of Cloud Computing

• Scalability and flexibility
Cloud server solutions offer on-demand resource availability. That lets you scale up or down based on your requirements without requiring physical hardware changes.

• Cost-effectiveness
The cloud’s pay-as-you-go model means you can save on CAPEX by eliminating the need for significant upfront investments in hardware and supporting resources. 

• Business continuity and high availability
Cloud providers typically guarantee 99.9% or greater uptime, so you can count on your data being accessible anywhere and built-in data protections that safeguard your data to some degree (more on that later).

• Maintenance and upgrades
Cloud providers take care of maintenance and updates so you can be sure your infrastructure stays up to date with the latest technology—without added costs or effort.

Disadvantages of Cloud Computing

• Latency and performance issues
Amazon Web Services (AWS) offers a long list of network latency causes, including transmission medium, distance the network traffic travels, number of network hops, data volume, and server performance. Latency can cause bottlenecks and slow down applications, disrupting business operations and impacting productivity.

• Control and customization limitations
Cloud environments are highly configurable, but there are limits when you compare cloud hosting to on-premises servers. That can be an issue if your organization has unique processing or security requirements.

• Ongoing costs
While you can forego CAPEX with cloud services, you may also see your long-term costs grow exponentially as the amount of data being generated grows and you integrate innovative new services.

• Security concerns
This is where the Shared Responsibility Model comes into play. While you can be confident your cloud provider is doing its best to secure its infrastructure, safeguarding your data is your responsibility. Without the proper data protection solution, it can be time-consuming, complex, and resource-intensive.

Advantages of In-House Servers

• Absolute control
When you own your servers, you completely control your hardware and software systems. This enables custom configurations and immediate access without relying on internet connectivity or worrying about latency.

• Predictable performance
Unlike cloud solutions, local servers typically offer onsite users faster data access and processing speeds. That can be essential for data-intensive applications.

• Security and compliance
When you have physical control over your servers, you can ensure you meet the most stringent security and compliance requirements. This can be especially important in high-regulated industries like healthcare and financial services.

Disadvantages of In-House Servers

• High upfront and ongoing costs
It takes CAPEX to buy the hardware, software, facilities, and resources required for an in-house server setup. Once in place, ongoing energy, maintenance, and staffing costs can quickly add up.

• Scalability limitations
Scaling in-house technology can be slow and expensive, often requiring additional capital expenditures and causing downtime while new hardware is integrated and configured.

• Added complexity
When you use cloud-based servers, your provider’s interface typically makes it relatively easy to manage your data. Managing disparate in-house systems can create complexity that drains resources.

Finding the Right Balance

Your cost-benefit analysis should guide your decisions regarding investing in cloud servers or in-house servers as your infrastructure evolves. The right balance ensures you take advantage of benefits from both in-house and cloud-based servers. 

Cloud vs. Physical Server Security: Unified Data Protection Handles Both

You are or will likely be among the many organizations employing cloud-based and physical servers. So, your data must be safeguarded from ransomware, breaches, and other disasters, regardless of where it’s being used.  

Arcserve Unified Data Protection (UDP) does all that and more. Let’s start with ransomware protection. Arcserve UDP is safeguarded by Sophos Intercept X Advanced for Server cybersecurity, protecting against any threat, including unknown malware, by utilizing a deep-learning neural network and AI combined with signature-based protection from common threats.

The solution adds more layers of protection, delivering complete IT resilience for your virtual, physical, and cloud infrastructures. Arcserve UDP is architected with cloud-native capabilities, integrating your onsite and offsite backup—including cloud backups—and rapid restore. The software includes built-in cloud disaster recovery and backup to private and public clouds, including AWS, Microsoft Azure, Oracle Cloud, Nutanix Objects, and others

You can back up your data directly to immutable storage, including on AWS, using Object Lock, ensuring unauthorized users can’t alter or delete your backups. Assured Recovery lets you test your backups to ensure you’ll meet your recovery time and recovery point objectives (RTOs/RPOs) and SLAs. And orchestrated recovery enables you to recover any workload, anywhere, at any time. 

Most importantly, you can reduce downtime from days to minutes.

Cost-Effective Backup and Disaster Recovery

Arcserve UDP helps you realize additional cost savings for backup and disaster recovery, whether using cloud or physical servers. Thanks to global source-side deduplication and data compression, the software reduces your backup storage space requirements by up to 95 percent.

Learn more in this post, “Optimizing Backup and Recovery: A Deep Dive into Data Deduplication and Compression.”

Find out if Arcserve UDP is right for your organization by requesting a demo.

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