On-Premise vs. Cloud: Is Migration Inevitable?

Today, most companies are going for a cloud-first approach while building or buying new software applications or BI solutions. Of course, they have – in the past – implemented on-premise solutions that power complex processes and workflows. It is difficult to completely replace these legacy solutions and simply move everything to the cloud. The process of migrating from on-premise to cloud has to be structured, gradual and well-planned.  

Having said that, there is no doubt that hybrid or multi-cloud architecture is the future. There will be legacy applications; there will be applications and data workloads on the private or public cloud; and, all of these applications will have to “talk” with each other. This is especially critical for companies that are looking to derive insights from enterprise-wide data.  

For industrial and manufacturing companies, there is also data from the shopfloor or factories that comes from IoT devices and sensors. Edge computing has caused a data explosion of sorts, and for companies to truly leverage all this incoming data, cloud is the only way forward.  

As it is now very clear for CIOs – cloud-based digital tools and technologies are scalable and flexible. With the right architecture and cloud optimisation frameworks, costs of storage and compute resources also come down.  

Cloud-based solutions allow the vertical and horizontal scaling required to host and analyse big data. Cloud-based data warehouses or data lakes can be used for storing large volumes of data and facilitates real-time analysis of data with scalable processing. With the right streaming data engine and data pipelines, it is now possible to have a “single source of truth” for most (if not all) enterprise data and information.  

Home Depot Opts for Cloud: A Case Study 

The Home Depot (THD), a leading home-improvement chain which sells over 700,000 products and operates 2,200 stores, relies on world-class analytics and BI to enable decision-making.  

Its predictive model for forecasting sales, inventory replenishment, and timely generation of performance scorecards has played a key role in the growth of both their top-line and bottom-line.  

But as its business grew, the company’s on-premises data warehouse was unable to scale up and it was a major bottleneck. Real-time intelligence processes slowed down, there were issues with compute capabilities and there was an urgent need to move BI workloads to the cloud.  

The company opted to move its data and BI engines to GCP (Google Cloud Platform), with a long-term view of transforming itself into a data-first company. Home Depot was gearing up to use AI and ML to get better at garnering insights and spotting risks & trends.  

The company implemented BigQuery, Google’s scalable, serverless data warehouse, and has been able to scale up data from 450 terabytes on-prem to 15 petabytes. This has improved decision-making and it can now handle more complex and demanding workloads. Home Depot is also able to monitor and analyse application performance data across its various stores and warehouses in real-time and take timely action as needed. 

This case study illustrates the clear value of moving to a cloud-based solution, especially when it comes to dealing with data at massive scale.  

The Difference Between On-Prem and Cloud 

On-premises infrastructure refers to servers owned and controlled privately by individual companies. It is typically housed in the facilities of the company and maintained by their IT team. Scaling up requires adding hardware and software, which can add to the costs. Updating and maintaining the infrastructure comes at considerable cost. 

In cloud computing, the company leases IT infrastructure from a third-party service provider who owns it and offers value-added services. The computing resources are made available on an as-needed basis, enabling scaling up only when there is a need. Therefore, the cost of using the infrastructure can also be optimised.  

The cloud can be public, private, or hybrid. In the public cloud, cloud computing is shared across different organisations and accessed via the internet. Private cloud refers to cloud computing dedicated solely to the organisation. In hybrid cloud, the company uses both public and private clouds. 

On-Prem or Cloud: Double Dilemma 

As Industry 4.0 buzzwords zap around the world and the reasons to embrace cloud seem compelling, the decision can still be hard to make. 

For one, on-prem infrastructure and the associated software have been built at considerable cost and the first instinct is to protect the investment. If they continue to meet the business needs, then there may be hesitation to discard them as some of the software may not work on the cloud. 

Security and reliability are two other considerations that may be preventing businesses from jumping to the cloud. The software on-prem is behind a firewall and gives the enterprises a certain level of control, which they may be unwilling to sacrifice. 

As a Merit expert adds, “While the cloud-platform providers like Azure, AWS and GCP certainly provide platform-level security, it is critical for the company to build the defenses for data protection and prevent data theft. There is also the risk of malware attacks. Therefore, companies must partner with the right security solutions company or build an in-house team to ensure security. Sometimes, companies think, we’ll move to the cloud and then we don’t have to worry about cyber-attacks and such. That is, unfortunately, not the case and it’s up to the enterprise to have a security strategy in place whether it is cloud or on-premise.”  

The software itself may have many customisations. They may have been built from scratch for the enterprise, or different teams would have added automations on top of an existing solution. To discard it when moving to the cloud may seem like sacrilege. 

While these may be valid considerations, managing and maintaining on-prem solutions can be costly. In addition to server hardware and software licenses, it also requires integration capabilities and an IT team to support and manage them. Updating the solution can become difficult, because security can become an issue over time. Scaling up will mean adding more hardware. If scaling is a temporary need, then all the investment will go to waste and infrastructure becomes redundant. 

By moving to the cloud, the software is hosted by a third-party provider who invests in the infrastructure and charges the tenants based on use. This brings down IT costs significantly. Companies can also scale up or down based on need. Since virtual technology is used to host the applications in a cloud-based server, the company does not incur capital expenses. Data backup, business continuity and disaster management become easier. They can also serve global clients more effectively with minimal effort. 

Also, as cloud computing provides nearly instant provisioning as a feature, installation and configuration of new software is minimised and it can be up and running instantly. 

Cloud service providers also offer security, but companies can and should add their own security to increase the security of their data and to ensure compliance. 

For businesses still unsure of moving to the cloud, the hybrid cloud solution is a viable alternative. Businesses can use different IT deployment models such as combine on-prem with private cloud and public cloud, connected by WAN connectivity. They can retain their enterprise software on-prem and integrate it with a cloud environment for analytics and Big Data. This can help to optimise investments, ensure security and minimise disruptions. 

Merit’s Expertise in Infrastructure Management and Hybrid Cloud setups  

Merit works with a broad range of clients and industry sectors, designing and building bespoke applications and data platforms combining software engineering, AI/ML, and data analytics.  

We migrate legacy systems with re-architecture and by refactoring them to contemporary technologies on modern cloud ecosystems. Our software engineers build resilient and scalable solutions with cloud services ranging from simple internal software systems to large-scale enterprise applications. We can also play a role in advising enterprises on their on-prem to cloud strategy, keeping in mind the constraints (budget and otherwise). When it calls for a hybrid cloud or multi-cloud setup, we’ve the necessary experience and expertise to implement an optimal infrastructure strategy that works – keeping in mind the needs of IT operations team, the innovation team and the CFO as well.   

Our agile approach drives every stage of the customer journey; from planning to design development and implementation, delivering impactful and cost-effective digital transformations. To know more, visit: https://www.meritdata-tech.com/service/code/digital-engineering-solutions/