Cloud vs Own Infrastructure

What is the difference between cloud and own infrastructure?

When planning your resources you have to consider the costs and benefits of owning your own IT infrastructure or use IaaS (Infrastructure as a Service) from a CSP (Cloud Service Provider). Both options have their advantages and disadvantages and we’ll go through them in this article.

Let’s start by explaining what Cloud, and what Own infrastructure implies.

Cloud refers to the delivery of computing services – including servers, storage, databases, networking, software, analytics, and intelligence – over the Internet (“the cloud”) in order to offer you faster innovation and flexible resources.

Own infrastructure means that you own the physical hardware and software. That you manage and maintain it on your own, rather than using a third-party service. And although that has it perks, it does make you less agile with the overall speed of market changes and trends.

The key difference between them is that with own infrastructure, you have complete control over the hardware and software, but you also bear the costs and responsibilities of maintaining and updating your infrastructure.

With cloud, you pay for and use only the resources you need, but the maintenance and updates are managed by the cloud provider.

There are various types of cloud infrastructure that we’ll talk about further in the article.

Will cloud replace traditional IT infrastructure?

It’s the question everyone asks. With the industry becoming increasingly digital, on-premises IT infrastructure may likely become obsolete. As the trend toward remote work further evolves, asset managers are more likely to consider outsourcing technology permanently.

According to predictions from Gartner, global spending on cloud services is expected to reach over $482 billion in 2022, up from $313 billion in 2020. Cloud technology essentially makes every technology lighter, faster, and more accessible from a customer point of view, and this fact will be a key driver in the migration of more services to cloud platforms.

The percentage of companies with most or all IT infrastructure in the cloud is expected to grow in the next 18 to 24 months, as you can see it from the chart above.

Organizations are also recognizing the value that cloud capabilities have helped their organization achieve sustainable revenue growth over the past 12 months. However, moving to cloud do not come without challenges that cloud providers must address. When asked about the biggest obstacles to implementing their cloud strategy are controlling cloud costs, data privacy and security challenges, and lack of cloud security skills/expertise.

What are the benefits of cloud computing over traditional infrastructure?

Cloud computing is offering a lot of advantages that we would like to appoint here:

Cost savings

Cloud computing eliminates the need of Capital Expenditures (CapEx). That means you don’t need to pay upfront to build your own datacenter, buy hardware, software, physical security, hiring IT specialists to setup everything properly and maintain it throughout the years. Depending on your needs, the amount of CapEx could be in the millions (EUR). Cloud computing uses the so-called model of Operational expenses (OpEx). Within the OpEx model you pay monthly or annually for the services you used during the given period. Once you’re on the cloud, easy access to your company’s data will save time and money in projects requiring access from anywhere.

Flexibility

The cloud computing offers organizations more flexibility overall versus the traditional on-premises servers. For example, if you need extra bandwidth, a cloud-based service can meet that demand instantly, rather than undergoing a complex, time-consuming  and expensive upgrade to your IT infrastructure. This increased freedom and flexibility can have a significant positive impact to the overall efficiency of your organization. Most cloud service providers offer automatic resource deployment on a need basis, and disposal of the same resources when they are not needed or used anymore. With on-premises IT infrastructure organizations are trading this flexibility over better control. You need to buy your hardware and software but you can’t just ship them back when they’re not needed anymore.

Disaster recovery

Losing data can be just as bad for a business as having a data breach. Storing data in the cloud makes it very easy to regularly back up your data. Many cloud services automatically back up your data to the cloud, ensuring that you always have a copy of it if something goes wrong. The backups can also be encrypted, protecting them from unauthorized user or cloud administrator access.

While you can store your data on-site, this is less convenient and, in many ways, less secure. For instance, if there is a flood, fire, or natural disaster that destroys your on-site data then you’ll be unable to access your backup, unless you have multi-geo data centers and so on. Most cloud-service providers mitigate risks by having multi-geo locations and mirror/backup your data between those.

22% of cloud users claim disaster recovery in four hours or less, while only 10% of non-cloud users could claim the same.

Storing your information in the cloud gives you more security so that if there is a problem at your local site you can access your data from another device and location. Many cloud service providers will also monitor backups to provide an extra layer of security against data loss.

Security

With cyber-attacks on the rise, keeping data safe is a constant challenge for enterprises that the cloud can help address. Many cloud service providers have built-in security features like RBAC (role-based access control) and encryption that help keeping your data secure.

While you can replicate these controls on-site, big cloud service providers have dedicated teams of experts doing only that that most organizations can’t affort such a team on-site. Storing data in the cloud also has the advantage of mitigating the risk of physical access to protected resources.

This is important because, in an on-site data center, employees with physical access to devices and data present a significant security risk as they could steal or destroy sensitive data.

Environment Sustainability

Data centers have a significant impact on the environment, accounting for 1% of electricity consumption globally. Therefore, hosting workloads in the cloud provides an opportunity for organizations to decrease energy consumption by not needing to maintain a data center on-site.

By outsourcing to a cloud service provider, a company can access a cloud provider’s existing resources on a pay-as-you-go basis without needing to power an on-site data center and all the infrastructure that entails. In other words, cloud provider data centers are more efficient than those of smaller organizations due to the scale.

Storing computing resources in the cloud also decreases greenhouse gas emissions, as not purchasing new infrastructure means there’s no energy consumed during manufacturing, transportation, or disposal of the equipment.

Let’s look at just one example. The datacenters of Microsoft, a major cloud service provider, will be supplied by 100 percent renewable energy. To accomplish this goal, they have implemented contracting tools such as proxy generation power purchase agreements for green energy to replace 100% of the carbon-emitting electricity consumed by all datacenters. By 2030, Microsoft will be carbon negative and by 2050, Microsoft will have removed from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.

Automatic software updates

Manually updating software is a time-consuming process, particularly if you’re dealing with dozens or even hundreds of different devices. Moving to the cloud enables you to hand over responsibility for software updates to a cloud service provider, who will automatically update the software so there are no security vulnerabilities.

Cloud computing enables users to focus on important daily tasks without wasting time manually updating devices. After all, in on-site environments manual updates are likely to take a backseat to an employee’s day-to-day responsibilities, leaving vulnerabilities open that cybercriminals can exploit.

In this sense, automated software updates also reduce the chance of human error leaving a vulnerability exposed. For example, there’s no risk of an employee forgetting to update a particular application and leaving the entire network vulnerable as the cloud service provider will handle this automatically.

Collaboration

If your business has a large number of people, then collaboration should be your top priority. Cloud computing makes collaboration a simple process. With Software as a Service platforms like Microsoft 365, your users won’t need to be be in a particular office, a specific device or connect to some VPNs. They would be able to access your documents anywhere, on any device, and collaborate on them real-time.

For example, SharePoint Online and OneDrive for Business allow users to work on documents simultaneously, co-authoring, with the option to add comments and make changes in real-time. This instant interaction enables remote teams to work more efficiently without needing to send documents back and forth via email and loose time, efficiency and momentum.

Many services also automatically sync documents you’re working on so that they’re regularly updated. This means you don’t need to waste time porting files from device to device or travel across the office to get feedback on important materials. In short, documents aren’t tethered to a local device, but available on-demand wherever you need them.

What are different types of cloud infrastructure?

In this section we will provide you more details about the types of cloud infrastructure. Shortly they are 3 types of cloud infrastructure: Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS).

Infrastructure as a Service (IaaS)

Infrastructure as a service (IaaS) is a type of cloud computing service that offers essential compute, storage, and networking resources on demand, on a pay-as-you-go basis. IaaS is one of the three types of cloud services, along with software as a service (SaaS), platform as a service (PaaS).

IaaS lets you bypass the cost and complexity of buying and managing physical servers and datacenter infrastructure. Each resource is offered as a separate service component, and you only pay for a particular resource for as long as you need it. In other words, you can easily increase or decrease resources, allowing you to pay less when needed or instantly provision and scale out resources to meet new demand.

The cloud service provider (CSP) is responsible for managing and maintaining the infrastructure, so you can concentrate on installing, configuring, and managing software and keeping your data secure. IaaS providers also offer additional services, such as detailed billing management, logging, monitoring, storage resiliency, and security.

Some of the advantages of IaaS:

• Reduces capital expenditures and optimizes costs
• Increases scale and performance of IT workloads
• Increases stability, reliability, and supportability
• Improves business continuity and disaster recovery
• Enhances security
• Helps you innovate and get new apps to users faster

Platform as a Service (PaaS)

Platform-as-a-Service (PaaS) is a cloud computing model that provides customers a complete cloud platform: hardware, software, and infrastructure for developing, running, and managing applications without the cost, complexity, and inflexibility that often comes with building and maintaining that platform on-premises.

Like IaaS, PaaS includes infrastructure (servers, storage, and networking) but also middleware, development tools, business intelligence (BI) services, database management systems, and more. PaaS is designed to support the complete web application lifecycle: building, testing, deploying, managing, and updating. Typically, customers can pay a fixed fee to provide a specified amount of resources for a specified number of users, or they can choose pay-as-you-go pricing to pay only for the resources they use.

Some of the advantages of PaaS:

• Reduced time to code
• Access to larger variety of resources
• Lower costs overall
• Support geographically distributed development teams
• Efficiently manage the application lifecycle

Software as a Service (SaaS)

Software as a service (SaaS) is a way of delivering applications remotely over the internet instead of locally on on-premises machines. SaaS applications are also known as:

• Web-based software
• On-demand software
• Hosted software

SaaS provides a complete software solution that you purchase on a pay-as-you-go basis from a cloud service provider. You rent the use of an app for your organization, and your users connect to it over the Internet, usually with a web browser. All the underlying infrastructure, middleware, app software, and app data are in the cloud service provider’s data center. The CSP manages the hardware and software, and with the appropriate SLA’s, will ensure the availability and the security of the app and your data as well. SaaS allows your organization to get quickly up and running with an app at minimal upfront cost.

One of the most popular examples of SaaS solutions nowadays is Microsoft 365. In just a couple of clicks you can get your e-mail service, chat, document management and collaboration going. SharePoint Online  is also part of that suite and it’s by far the most popular platform you can use to build your Intranet. The only requirements for using SaaS offerings are to have an internet connection and you can access your data from everywhere in the world.

Some of the advantages of SaaS:

• Easy onboarding
• Use free client software
• Mobile ready applications
• Access data and services from anywhere
• Advanced security
• Easy scalability

Top Cloud Service Providers and cloud market

The cloud market share has shown tremendous growth in the recent years. The market of cloud computing has boomed exceptionally and started to cover a broader scope of technologies, engineering, products and services.

As a result, it gives birth to a multi-billion-dollar industry where many cloud computing companies compete for expanding their cloud market share. The current global cloud market size is estimated at around $482 billion and is expected to grow by 16% in the next couple of years. Here you can see the global market share of the top 5 cloud service providers.

Apart from the growing market the need of good, qualified engineers will grow as well because all these workloads still must be supported.

Conclusion

If your company is still using on-premises infrastructure, it is high time you consider moving all your workloads in the cloud. Only this way you can take advantage of key benefits, and gain some competitive advaantage. We at Impactory GmbH can help you by analyzing your current environment, plan and help you do the transition from on-premises to the cloud as smooth as possible. Reach out to us to discuss your cloud journey today!

Additional Resources

1. Already in the cloud, but your Intranet was left behind? Find out How to migrate your Intranet to SharePoint Online?
2. Compliance is a major concern in the cloud. How to make SharePoint Intranet GDPR Compliant is a must-read if you are going that route.