Cloud or on-premise storage: how to make the right choice

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Data storage needs aren’t merely increasing: they’re exploding. According to DataCore’s report, The State of Data Storage 2024, AI adoption and the need for longer retention of data means storage demands could double within the next three years.

This gives the modern CIO both headaches and options. Do they let the cloud handle all of the company’s storage needs, handle some of it, or keep everything on-premise? Just how much data can they store in the cloud, and how much will have to be handled within the confines of the corporate infrastructure?

That’s the complicated question that this article seeks to answer.

Data sovereignty, security and costs

Organizations must take many factors into account. For example, heavily regulated industries, such as financial services or pharmaceuticals, will have to consider the issue of data sovereignty and protection of confidential data. For some organizations, looking at the speed of access, latency will be a vital issue.

There are two issues, however, that will dominate any discussion about cloud deployment: security and costs.

The latter has driven take-up of cloud from the very beginning. Many users were attracted by the idea of paying for what was being used, while the need to make any capital investment and pay for cloud under operational expenses will have delighted finance directors.

Then we come to security, which has always been a key differentiator for the cloud providers. While there’s a reluctance from many businesses to use cloud for vital customer data and intellectual property, providers have made massive investments in security features.

That’s an attractive option for organizations that may not have the same expertise. Running a security operation in-house means deploying security personnel and constant monitoring of resources. In recent years, there have been various regulatory issues introduced – GDPR, NIS2, and certain industry-specific requirements – that mean every organization must put efforts into storing data securely.

Running an on-premise setup

That investment will be part of any investment in an on-premise set-up. Running your own system in-house requires operational staff and real estate investment – a data centre will have to be housed somewhere. Then consider energy costs. The increased use of AI comes with a growing demand on servers, and despite efficiency innovations that may come with a rise in electricity bills.

In its latest State of the Cloud report, Flexera highlighted just how much these issues concern CIOs: 84% of respondents say that their biggest challenge is the management of cloud spend, while 76% of them point the finger at security. Many organizations have adopted a cloud-first policy in an attempt to cope with these two issues.

According to Howard Hall, CEO of HPE reseller DTP Group, there has been a big change in the past 12 months as companies that have been regular customers of the large hyperscalers change their approach.

“Over the past year, we’ve seen some shifting sands,” Hall said. “Many companies that have gone down the hyperscaler route are beginning to move to an in-house setup. We’re seeing cloud-like services being delivered on-premise for about 40 to 70% cheaper than the cloud companies are providing. The customer experience is exactly the same.”

He provided an example of the type of cost saving that could be expected. “We’re working with an insurance company that’s looking to overhaul its system. Originally, they were going with a cloud hyperscaler, and the projected cost was about £23 million [around $17.5 million]. We looked at what they wanted and moved everything in-house, and it will come in at £13 million: that’s £10 million less.”

Hall said that the on-premise data security had also improved. “This again is something we have seen improve over the last year or so. There have been a number of air-gap solutions that have come to market, and they have changed the level of security.”

It remains true that organisations that handle their own security will have issues – the need to employ expert security personnel will be essential (and expensive). However, as the cost of on-premise cloud has come down, there will be more funds available.

“Besides,” said Hall, “the hyperscalers themselves have suffered outages – AWS was down last year, and we’ve seen Microsoft down too.” He said there will always be risk. “The safest storage solution is probably tape still – there’s a lot of it out there.”

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Room for cloud

There will still be room for cloud solutions. Startup companies will be reluctant to invest in a host of new equipment and licenses: it will be considerably easier for them to call up cloud services while still in launch mode. However, we’re definitely going to see more in-house said Hall. “We’re also going to see much more storage and compute coming together.”

The recent rise in interest in HPE’s GreenLake is a good example of this. “We’ve seen massive traction with GreenLake,” said Hall. “That’s a bit of technology that has changed over the past two years, thanks to the acquisition of a couple of companies: Morpheus and OpsRamp.” HPE has certainly been strengthening in that area, recently buying the disaster recovery company Zerto to bolster its storage options.

Currently, any organization has plenty of choice of the way to go, when it comes to storage.  If there’s not a huge amount of capital available, then cloud is going to be a useful option.

There’s a lot of simplicity involved here. It’s much easier to scale workloads: a few clicks on the mouse and you have built a corporate storage system.

One final consideration is that many companies now opt for hyperconvergence of compute, storage and networking, seeing it as the way forward in the future. There is a strong argument to tie storage more closely to the compute element of the system.

Cloud or on-premise storage: Which is right for you?

One thing is certain: organizations have more storage options than ever before. The challenge is to make informed decisions that match your strategy.