On-Premise
Software and IT infrastructure run in your own data centre or on your own servers, rather than in the cloud.
On-premise means running software and IT infrastructure on your own servers in your own data centre. Despite the cloud trend, on-premise remains relevant for many companies: strict data protection, compliance or the wish for full control are strong reasons to keep infrastructure in-house.
What is On-Premise?
On-premise (also on-premises or on-prem) describes an IT delivery model where hardware, software and data are owned and operated on the company’s own premises. The company is fully responsible for procurement, installation, configuration, maintenance, updates and security. Unlike cloud (SaaS, IaaS, PaaS), the company keeps full control of its data and systems. Hybrid models combine on-premise infrastructure with cloud services.
How does On-Premise work?
With on-premise, the company buys or leases server hardware, installs it in its own server room or colocation data centre and runs the software itself. The IT department is responsible for network, storage, backup, security patches, updates and monitoring. Virtualisation (e.g. VMware, Proxmox) maximises hardware utilisation. Disaster recovery requires your own backup strategy with off-site copies. Upfront cost (CapEx) is high but ongoing cost (OpEx) is predictable.
Practical Examples
Hospital: Patient data must be stored on own servers in Germany for regulatory reasons, with full control over access.
Defence: Classified information must not leave the corporate network and is processed on air-gapped servers without internet.
Mid-size engineering company: ERP (SAP, Odoo) runs on own servers in the server room because management wants full data control.
Research institute: Compute-intensive simulations run on an own HPC cluster because cloud cost at constant load would be uneconomic.
Typical Use Cases
Strict data protection: Sectors like health, defence and finance with rules on where data is held
Full control: Companies that want to manage hardware, software and data themselves
Predictable cost: Long-term planning without variable cloud spend
Low latency: Applications that need local processing with minimal delay
Legacy systems: Older software that is not cloud-ready and must run on-premise
Advantages and Disadvantages
Advantages
- Full data control: No dependence on third parties for sensitive data
- Compliance: Meeting strict rules on data storage and processing
- No ongoing cloud cost: After the investment, operating cost is predictable
- Independence: No vendor lock-in or dependence on cloud provider availability
- Performance: Local processing without network latency to the cloud
Disadvantages
- High upfront investment: Servers, storage, network and space must be acquired
- Maintenance: IT must run hardware, updates, backups and security themselves
- Scaling limits: Adding capacity means new hardware with lead time
- Disaster recovery: Own backup and recovery strategy must be built and tested
Frequently Asked Questions about On-Premise
Is on-premise more expensive than cloud?
Can you combine on-premise with cloud?
How many IT staff are needed for on-premise?
Related Terms
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