There is little debate that cloud computing has dramatically changed the IT industry. Companies now have a legitimate alternative to the traditional on-premises model of operation, and one that is not only affordable but flexible. Among the different players in the cloud computing space, AWS has emerged as the clear leader with the highest market share of 34% as of Q3 2022.

As companies consider whether to host their infrastructure on-premises or the AWS cloud, there are 7 key areas that should be considered. This article explores these criteria e to help compare and contrast the alternatives and make a more informed decision. 

On-PremisesAWS Cloud
CostHigh upfront costs associated with the physical installation and ongoing maintenance of infrastructure. CapEx can be depreciated over time.Pay only for what you use. Normally budgeted as OpEx with no depreciation for procurement, installation, and maintenance.
DeploymentPhysical installation is time-consuming and requires onsite expertise. Rapid deployment with minimum friction, but requires some knowledge of service offerings for optimum configuration.
ControlComplete control over data and resources. Peace of mind knowing that hardware is onsite.AWS cloud provides companies with complete control over their data and resources.
Security & ComplianceVulnerability to cyber attacks is high. Physical proximity of servers makes them an easier target and requires qualified personnel to manage. Data is hosted on servers located across the world. The cloud offers anonymity and additional features such as data Encryption and IAM. AWS Shared Responsibility Model.
ScalabilityScalable but requires long-term commitment to hardware. Unlimited scalability up or down as needs change. 
Backups & Data RecoveryFull physical control but can be expensive and time-consuming.Simple and Straightforward. Multiple options provided for Disaster Recovery.
Flexibility, Adaptability, & ResponsivenessBound to the limitations of on-premise hardware.Inability to quickly adapt to sudden changes in market conditions.Flexibility and adaptability is almost limitless and continuously expanding. 


On-Prem: Companies that choose to host their infrastructure on-premises fully bear the costs of installation as CapEx, along with the ongoing OpEx of power consumption, space, maintenance, and personnel costs associated with the management of hardware. Dedicated on-site servers are expensive and often require multiple purchases. To ensure data accessibility, security, and compatibility with other systems, on-premise hardware needs to be consistently updated resulting in recurring expenditure. It is very challenging to design an on-prem system that fits the needs of the company exactly and resources are often over-provisioned. Expensive hardware may sit idle waiting for spikes in resource demand to occur.  

AWS: One of the primary benefits of the AWS cloud is that enterprises bear costs only for the resources they use as OpEx. Cloud costs are straightforward, predictable, and easy to track. Companies that choose to migrate to the AWS cloud need not worry about the CapEx and hassle associated with the procurement, installation, and maintenance of infrastructure. 


On-Prem: Companies that choose to host infrastructure on-premises have to deploy their resources in-house. This may take time since hardware needs to be ordered and delivered, and then the infrastructure needs to be physically installed on-site. Installation and deployment require expertise in the form of qualified staff and/or external contractors. Additionally, changes or upgrades to infrastructure may result in additional delays for similar reasons. 

AWS: The AWS cloud provides ready access to resources that companies can deploy rapidly and with minimum friction at a scale that matches their requirements. AWS offers numerous services and configuration options, and onsite expertise or a contracted partner can provide assistance and assurance that the most cost-effective and secure deployment is built. 


On-Prem: One of the key reasons enterprises choose to host their infrastructure on-premises is that it enables them to maintain complete control over their data and resources. The proximity of on-premise servers gives companies additional control over operations and provides them with a sense of confidence, assuming they have sufficient IT support to maintain their on-prem servers.

AWS: AWS Cloud offers similar access and control as on-prem infrastructure without the inconvenience of having to maintain on-prem servers. Companies that choose AWS have complete control of their computing resources. AWS Resource Access Manager (RAM) allows users to simplify security and access control over multiple accounts. Users can also set granular access to AWS resources through IAM.

Security & Compliance

On-Prem: Security is one of the key concerns for modern-day enterprises and is especially important for highly-regulated sectors such as healthcare and finance where enterprises need to ensure that they are meeting security and compliance standards. Poorly built or poorly managed on-prem servers can be vulnerable to complex modern cyber-attacks and the physical proximity of the servers to the company often makes them an easier target.

AWS: Data stored on the AWS cloud is hosted in secure data centers on servers that are not localized to the users themselves, therefore making the possibility of a physical breach less likely. Additionally, AWS invests heavily in security. For example, all data flowing across the AWS global network is encrypted at the physical layer before leaving AWS facilities.

AWS has a Shared Responsibility Model with its customers for security and compliance. AWS states that it bears “the burden of operating, managing, and controlling the components from the host operating system and virtualization layer down to the physical security of the facilities in which it operates.” The customer assumes responsibility for the guest OS, application software, firewall configuration, and choice of services and has to ensure that they align with security and compliance requirements. 


On-Prem:  On-premise servers are scalable but the scalability comes at a cost. Scaling with on-prem servers requires the purchase of new servers and may even require the purchase of property on which to host the servers. On premise scaling usually only goes in one direction, up. It is very difficult to scale down when demands for resources are low, leaving physical resources to sit idle and diminishes the overall system efficiency.  

AWS: Scaling on the AWS cloud is effortless and requires nothing more than an adjustment of the subscription to gain access to additional resources. This scaling can go up or down depending on system needs. Seasonality demands are easily accounted for, and cost efficiency is realized during down periods.

Backups & Data Recovery

On-Prem:  Having data backups on-site does provide some piece of mind, but losing information and dealing with data recovery can be crippling for companies with on-prem infrastructure. Backup data storage is not only expensive but recovery takes time, energy, and expertise. 

AWS: Data backups on the AWS cloud are simple and straightforward. AWS provides companies with numerous options for Disaster Recovery (DR) of varying degrees of complexity. Companies choose between cost-effective approaches such as simple backups and more complex strategies such as the usage of multiple active Regions.

Flexibility, Adaptability, & Responsiveness

On-Prem: Companies hosting their infrastructure on-premises are bound by the limitations of the resources that are available to them and may not be able to adapt to sudden and unforeseen changes in market conditions such as the COVID-19 pandemic. Rapid expansions in infrastructure require fast deployment of CapEx spending which may not be readily available. 

AWS: AWS provides companies with the flexibility and responsiveness they need to adapt to ever-changing market conditions. Companies can take advantage of AWS’s flexible resource provisioning that enables companies to scale up or down based on their current requirements and AWS’s Auto Scaling feature that automatically adjusts capacity to maintain steady and predictable performance at optimized costs. The AWS cloud also provides companies with additional benefits such as the ability to: 

  • Embrace flexible remote working schedules and ensure seamless collaboration between employees even when they are working remotely
  • Experiment cost-effectively by trying out new ideas at a smaller scale on the cloud
  • Consistently adapt and innovate by taking advantage of the ever-increasing range of services provided by AWS

Conclusion: When Does On-Premises or AWS Cloud Make Sense?

Hosting infrastructure on-premises is the right solution when a company’s infrastructure requirements are steady, predictable, and not subject to sudden changes. This ensures that costs are predictable and the company has all its infrastructure in-house with resources being optimally used. Additionally, in situations when enterprises want to have total control over their infrastructure for reasons such as extra-sensitive data that must be secured and monitored rigorously, companies may choose to have their infrastructure secured on-premise. In such scenarios, on-premise infrastructure may cost more initially but when the investment is spread across the entire lifecycle of the system, the overall expenses may amount to the same or better than on the cloud.

The AWS cloud emerges as the optimal choice for modern enterprises that want to be nimble, responsive, and adaptable. It provides companies with a cost-effective means to leverage functionality that is on par with or sometimes even better than on-premise hardware without the hassle of having to maintain infrastructure. 

About TrackIt

TrackIt is an Amazon Web Services Advanced Consulting Partner specializing in cloud management, consulting, and software development solutions based in Marina del Rey, CA.

TrackIt specializes in Modern Software Development, DevOps, Infrastructure-As-Code, Serverless, CI/CD, and Containerization with specialized expertise in Media & Entertainment workflows, High-Performance Computing environments, and data storage.

TrackIt’s forté is cutting-edge software design with deep expertise in containerization, serverless architectures, and innovative pipeline development. The TrackIt team can help you architect, design, build and deploy a customized solution tailored to your exact requirements.

In addition to providing cloud management, consulting, and modern software development services, TrackIt also provides an open-source AWS cost management tool that allows users to optimize their costs and resources on AWS.