Yogi SchulzHow does a cloud computing environment compare to an on-premises computing environment? Are the benefits of cloud computing overhyped? Isn’t the cloud just someone else’s data centre?

What topics should chief information officers (CIOs) consider when deciding whether to adopt more cloud computing services for their organization?


In addition to hardware, network and a building, cloud service providers offer a rich range of software functionality to:

  • manage your cloud computing environment;
  • operate your applications;
  • enhance the functionality of custom applications.

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The benefits of all this software include:

  • high reliability and predictability of the computing environment;
  • rapid development and deployment of applications;
  • exploiting the value of software developed by multiple global communities.

Why can’t the on-premises computing environment achieve the same functionality?

The sheer size, variety and sophistication of the AWS, Azure and Google data centre and software offerings are fantastic. We’ve reached the point where no organization can operate even a subset of this software independently. The development and support costs would be astronomical.

CIOs thinking of running their own on-premises computing environment should quickly abandon the idea and sign up with a cloud service provider.


The cloud computing environment is touted as a cheaper solution than on-premises computing. This assertion is based on:

  • the rates for various services that cloud providers have published;
  • the pay-as-you-go billing model of cloud service providers avoids the upfront capital and ongoing operating costs for an on-premises computing environment;
  • the pay-as-you-go billing model means you only pay for the computing resources you consume; by contrast, for an on-premises computing environment, you’re paying for what you bought, whether you’re using it or not.

Why can’t the on-premises computing environment cost the same as what the cloud service providers charge?

The primary reasons include:

  • the lack of scale inherent in an on-premises computing environment for a single organization;
  • the inability to spread the cost of expensive specialty staff among many customers.

Although cloud service providers’ rates are attractive, many organizations experience a significant jump in resources consumed after migrating to the cloud. This jump is caused by the ease of access to computing resources, resulting in a total cost that’s often no different from the previous cost for the on-premises computing environment.

CIOs quickly learn to dampen management’s hopes that migrating to the cloud will reduce costs.


The cloud computing environment is better secured than the on-premises computing environment.

Why can’t the on-premises computing environment operate with the same level of security?

The enormous scale of the cloud service providers enables them to manage security comprehensively even as the threat level increases. No organization with an on-premises computing environment can match this capability due to the required personnel and software costs.

The added security of the cloud environment provides comfort to CIOs who worry about security gaps in their on-premises environment.

Custom software development

The cloud computing environment offers software development teams:

  • immediate ability to spin up and drop as many development environments as they need;
  • instant access to a rich range of software modules to integrate into custom cloud applications.

Why can’t the on-premises computing environment deliver the same capability?

The on-premises computing environment can implement:

  • the tools required to spin up and drop development environments;
  • the same software modules.

However, it’s difficult for the on-premises computing environment to:

  • operate the significant number of physical servers that underlie the potential development environments;
  • keep up with installing patches and new releases for all the software modules.

The benefit is that the cloud computing environment enables rapid development and deployment of applications. That leads to a competitive advantage that CIOs can brag about in management circles.

Catalyst for innovation

The scale of the cloud computing environment can foster innovation, especially for organizations that have already made significant progress in their digital transformation.

Can’t the on-premises computing environment enable the same level of innovation?

Perhaps. However, the demands of innovation typically include:

  • lots of computing power;
  • significant data storage;
  • a wide range of software;
  • a substantial system integration effort.

These components require a significant investment for an on-premises computing environment. On the other hand, all cloud service providers have made the necessary investments to make these features of their computing environments attractive and easily accessible to customers.

CIOs leverage the cloud to respond to the demand for more innovation.


The cloud computing environment is powerful and complex. This complexity can lead to configuration management issues. Cloud service providers hide the complexity or at least simplify it through their powerful management consoles.

Can’t the on-premises computing environment operate as smoothly because of its lower complexity?

Yes. The cloud doesn’t offer a material advantage over a well-run on-premises computing environment.

Application availability

The availability of the cloud computing environment is incredibly high.

Why can’t the on-premises computing environment achieve the same availability?

The enormous scale of the cloud service providers enables them to focus on high availability and cover the associated costs profitably. No one with an on-premises computing environment can match this capability because of the capital and personnel required.

Most CIOs are beaten up for occasional lapses in high availability in our 24/7 world. Migrating to the high availability of cloud service providers removes a big headache.

Capacity scale-up

The cloud computing environment offers instant capacity scale-up.

Why can’t the on-premises computing environment achieve the same scale-up?

Many organizations could achieve instant scale-up. Unfortunately, many organizations torture the CIO through a detailed business case and a lot of procurement rigmarole before a scale-up investment is approved. In addition, worthwhile capacity planning is expensive, complex and still subject to a significant error term.

As a result, CIOs throw their hands up, sign with a cloud service provider and scale-up becomes a non-issue.

Capacity provisioning

The cloud computing environment provides fast and easy provisioning.

Why can’t the on-premises computing environment achieve the same provisioning?

To improve provisioning, many organizations encounter the following difficulties:

  • constructing new or expanding existing data centres;
  • reconfiguring and expanding existing networks;
  • not having the staff to perform this work.

Because fast and easy provisioning is valuable for the agility many organizations crave, CIOs outsource provisioning to a cloud service provider.

For more ideas for rounding out your cloud strategy, please read Accelerate your digital strategy by finding the right partner.

Yogi Schulz has over 40 years of information technology experience in various industries. Yogi works extensively in the petroleum industry. He manages projects that arise from changes in business requirements, the need to leverage technology opportunities, and mergers. His specialties include IT strategy, web strategy and project management.

For interview requests, click here.

The opinions expressed by our columnists and contributors are theirs alone and do not inherently or expressly reflect the views of our publication.

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