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Pros and Cons of Virtual and On-Premises Servers

Business continuity is vital for any organisation, both big and small.

You can either choose to store your data in the cloud, or using on-premises servers.

Most people are aware that the cloud is a growing trend for businesses, but for those who haven’t wrapped their heads around the advantages of the cloud, let’s explore the pros and cons of cloud vs on-premises servers.

Cloud-Based Server 

A cloud-based server is a virtual server hosted on the internet.

This enables you to access your data from anywhere in the world with relative ease.


  • Virtual servers eliminate the need for capital expense since there is no requirement for onsite hardware. Instead, the businesses pay a monthly subscription which is just an operational expense. 
  • Easily scalable. Virtual servers are built to scale and they can be quickly expanded as your needs increase. They are ideal for those businesses that are facing rapid growth.
  • The data is backed up on a regular basis. So, there’s only a minimal risk of losing critical data.
  • You can build the cloud storage according to your budget. This helps businesses keep their initial operating costs down.
  • An external company manages the virtual server. This helps to reduce the IT staff’s responsibilities freeing up their time for other tasks.


  • The virtual server requires fast and reliable internet. If you have a slow connection, you’ll have trouble accessing and downloading your files. 
  • Since you rely on an internet connection to store and access your files, an internet outage can bring everything to a standstill and delay your operations. 
  • The more storage you require, the higher the monthly cost. A rapidly scaling system can cause your payments to balloon if left unmanaged. 
  • Law enforcement can access your files in case of any litigation on your business. A search warrant for the company hosting your server can force them to consent to a search. 
Laptop in Server Room

On-Premise Server

An on-premise server is a physical server present on-site that a company must manage and maintain individually.

You own the infrastructure and are responsible for the lifecycle management. 


  • On-site servers do not rely on the internet to store and access data. These servers provide you with an internal network connection that is accessible at any time and not dependent on an internet connection.
  • Without the need for a monthly subscription and an internet connection to access data, you’ll save on those costs. 
  • With an on-premise server, you have complete control over your hardware and infrastructure. Instead of depending on a cloud storage company to upgrade the feature, you can do it yourself. 
  • It can be cost-effective for businesses that are not worried about uptime. In addition, being in-house, the monthly internet costs are also lowered. 


  • With in-house servers, businesses need dedicated IT support to monitor, manage and maintain the servers. The extra personnel can add up significantly and create a huge burden for the IT department. 
  • Setting up an on-premise server requires a significant investment to purchase the servers, hardware, software, licenses, etc. 
  • Since you’d have to keep upgrading the hardware and software, you’d have to keep investing along with the capital expense. Hence, the maintenance costs may be higher. 
  • Businesses in the Finance and Health sector have to abide by the government regulations regarding infrastructure. Compliance can cost you money along with the expenditure for external audits. Failing to comply can also lead to potential fines. 
  • It has limited scalability options. As your business expands, you’d have to spend more to upgrade the servers to handle the new load. 
  • With the servers on the premises, you can easily lose data due to malfunction. Additionally, if your servers are compromised and held for ransom, you can lose them permanently. 


Both virtual servers and on-premises servers have their advantages for specific situations, however for the majority of businesses cloud-based servers are far more stable, secure, and cheaper than on-premises server solutions.

Talk to our Gold Coast data security experts if you’re thinking of making the move into the cloud.

Cloud Voice & Data