Welcome to the “Introducing” series. Today we will do a quick visit comparing traditional on-premises (on-prem) computing with Cloud computing. The first part of this series introduced IT organizations and what they do which is to provide applications and systems required for the company to function.


What is traditional on-premises (on-prem) computing?

Companies need specific resources to provide applications and systems to their end-users and customers. The underlying requirements break down into the following areas: Computing, Storage, Network.

  • Computing resources are servers that provide a function for the organization such as a web server that hosts a company’s web site, a server that provides a database back-end or a laptop/desktop/tablet which is used by an employee of the company.
  • Storage resources provide the space to store data for computing resources. Storage is to hold data. As an example, storage is used for the company’s database server(s), file server(s), backups or even to provide the operating system required to host these functions. Storage is also where you keep your files on your work or personal computer.
  • Network resources provide the communication between computing and storage resources as well as connectivity to the Internet (or other locations within the company).

IT organizations provide the IT resources required for an organization to function. In traditional on-premises (on-prem) computing all resources which are required to run a company exist in a company’s datacenters. These datacenters could be as simple as a couple of servers or workstations which run under an IT person’s desk or as complex as dedicated buildings in different geographical locations.


What are the benefits of on-premises computing?

When you buy a cell phone, you can use that cell phone to pretty much call anywhere, text anyone or access the Internet as much as you like (within some restrictions like over-seas calls, or when you hit a data limit). You own the device and you can use the device as much as you like. Your cell phone has a level of computing (processing power), storage (space on the device) and network connectivity (wireless, or a data plan). How cell phones work is a lot like on-prem computing. You know how much it cost to buy the device, you know how much it costs to have that device every month, you have to keep your applications up to date, and you know that at some point you will have to pay to replace the device when it becomes obsolete. Think of your phone as the computing, storage and network resources which you use as an individual.

With on-premises computing, it’s like your cell phone. The IT organization buys the resources that they need (compute, storage, network) and they manage and maintain them. An organization which provides their technical resources on-prem has direct control of all their resources and how those resources will be used. When additional capacity is required (computing, storage, or network) or older equipment needs to be replaced IT organizations perform these tasks and pay for these resources. This can be beneficial as there should be a consistent cost for the resources which will not vary based on how much those resources are used. This makes it easier to budget and provides maximum control for the systems that the organization is dependent upon.


What is Cloud Computing?

In Cloud Computing the applications and systems and the underlying resources (compute, storage, network) which were provided on-premises are now provided via the Cloud. This approach means that IT organizations do not have to perform some of the tasks that they would normally have to perform on-prem as they are provided by the Cloud provider. For most organizations, this means that some of the resources are in the Cloud and some of them are still on-prem. This is referred to as a “hybrid computing model” (on-prem + Cloud Computing). Some organizations are brand new and do not leverage any on-prem resources. These are commonly referred to as “Born in the Cloud”.


What’s different between Cloud Computing and on-prem computing?

There are several major ways that Cloud Computing is different than on-prem computing.

  • Pricing: The major difference in approach with Cloud computing is that the company is not paying to buy all the hardware – instead they are paying primarily based on what they use within the cloud environment. Cloud computing provides access to IT resources generally on a pay-as-you-go method. As an analogy consider electricity at your home. Most of your bill is determined by how much electricity you use. This is an example of pay-as-you-go or a “consumption-based” model for billing. While there are some options to pre-pay in Cloud Computing, the majority of the cost is based on how much your organization consumes monthly.
  • Decreased management requirements: Cloud computing provides the same types of resources which are available in on-prem computing (compute, storage, network) but it does so without the requirement to maintain an on-prem data center. Generally, these resources are available via the Internet (or via a dedicated network link). The Cloud provider handles the management of many of these resources instead of your IT organization. This means that your IT organization should not have to spend as much time managing resources as they do if they are running these same resources on-prem.
  • Decreased resource control/shared physical resources: The trade-off to decreasing how much work is required to manage these resources is a loss of control over those resources. If an organization runs a server in their data center, they can choose what that physical system will be used for and how the resources will be assigned for that system. In the Cloud, there is a choice for the size of the server that you are running but you can’t decide what else is sharing the physical resources.
  • The pace of change: Since the introduction of Cloud Computing we have seen a significant increase in how quickly new functionality is brought to the market. In Cloud Computing, the services which are provided are enhanced and changed often daily (or even hourly). For IT organizations this is a plus and a minus. On the plus side, new capabilities are being provided to your IT organization on a very regular basis. On the negative side, as changes occur your IT organization must be able to stay on top of those changes to understand what they are and how they could impact your business.
  • Scalability/Flexibility: The primary benefit of cloud computing is the ability to scale up or down as required. A common use-case for this is monthly processing. When monthly processing needs to occur you can scale up the resources available to speed up the process and when the processing is done the resource can be scaled back.
  • Economies of scale: One of the interesting aspects of Cloud Computing is how economies of scale play into the cost of the resources which they are providing. Imagine for a minute that one or two companies choose to buy out much of the toilet paper that is produced in the world. Those companies would be able to buy toilet paper at a discounted price due to the amounts which they purchased. They could then, in turn, sell toilet paper to customers at a decreased price because they are purchasing it at a lesser price. The same concept is occurring here with cloud computing. Several large vendors (IE: Microsoft, Amazon, Google, etc) are purchasing a bulk of the computing, storage and network capacity in the world and hosting these resources in large data centers around the world. They are then providing companies with the ability to use these resources at a discounted rate on a per-use basis. which they can do based on their ability to purchase and provide these resources at an incredible scale. The purchase of these bulk items also causes the price to increase for those companies who are purchasing small numbers of those items directly instead of utilizing the resources which were purchased in bulk. Over time this results in an increased cost for the consumer who is purchasing directly versus using resources provided by these vendors.
  • Security: Security and the Cloud is always an interesting discussion. Some companies stand solidly on the platform that the Cloud is not secure enough for their organization. On the other side of the debate, there are security features that are available in the Cloud that are just not available on-prem and the size of the team working on security at Cloud providers is far beyond what an individual organization can provide. In this article they reference Microsoft spending 1 Billion dollars (US) on security. As an analogy – some would say that it’s safer to keep your savings hidden under your mattress. Others would say that it’s safer to keep your savings in the bank. At home, you have control of the security, but the bank has security levels that you can’t achieve at home. On the other hand, people know that banks have money from lots of different people therefore it’s expected that they would be the targets of attack more often as a result. The same theory may also apply to Cloud Computing providers – hackers may prefer to go after lots of different customers by targeting a Cloud provider instead of targeting a specific organization.


Why does Cloud Computing matter?

Cloud Computing is changing how IT organizations do business and it is changing the skillsets which IT organizations must have to effectively support their organizations. Those individuals who learn how to embrace Cloud Computing and related technologies are positioning themselves for a career that will have a strong future. Cloud Computing can provide your organization with a competitive advantage and when leveraged correctly it can decrease the cost to run your IT organization.


Additional resources:

If you would like to delve deeper into this concept I recommend the links added above as well as a great beginner’s guide to cloud computing from Microsoft. Additionally, the study guide for one of the Azure certifications (AZ-900) provides excellent information in this area.


Thank you to Chad S and Beth F for their help on this blog post!


Series Navigation: