BI: Difference Between Cloud and On-premise

What are the differences between Cloud and On-premise?

The model for how companies acquire and field software for business intelligence purposes has changed dramatically in the last five years. One major factor driving this change has been the emergence of cloud-based computing options and software as a service. Modern operations are increasingly comfortable having large amounts of their data, processing capacities and even actual software hosted remotely. One of the biggest challenges in the BI sector today is figuring out just how much of your infrastructure you want to have off- or on-premise. We’ll take a look at the pros and cons of both approaches and how a mixed environment may also be beneficial.


Comparing cloud to on-premise options in terms of security can be a bit tricky. Cloud-based solutions benefit immensely from regular updates by the vendors supplying them. Poorly updated software is one of the leading security risks in almost every sector of the business world. On the other hand, large farms of remotely hosted systems are very attractive targets to hackers by virtue of their size alone. SaaS providers see themselves in a perpetual battle against interlopers, but they also put significant resources to work on a daily basis because their reputations are on the line. The awareness of the risks in the cloud sector goes a long way to alleviate concerns about security. In fact, all the major recent data breaches reviewed by Bankrate occurred at on-site data centers rather than in cloud-based systems.


When companies start thinking about moving to off-premise solutions, the first thing that crosses their minds is often pricing. On-site solutions often carry very steep upfront costs, while cloud-based systems are typically billed on a recurring basis. It’s also important to appreciate that every piece of software that’s run on-premise has to be hosted on a piece of hardware. Installing, maintaining and replacing those systems are costs that accumulate rapidly. When a server dies at a SaaS provider, that’s a vendor problem, and it’s usually handled quickly and with no interruptions of service.

Costs also can vary dramatically among vendors. For example, Microsoft’s Power BI is integrated seamlessly with its Office 360 products, and it’s available to small businesses in a free version. The paid version starts at $9.99 per month, per user. Other vendors, such as SAP, sell products with pricing options that are opaque and require negotiation.


Getting up and running with BI systems for the first time is challenging regardless of whether you elect to use a cloud-based or on-premise solution. The big difference is that on-site systems require significantly more hardware setup. They may also demand multiple visits from the vendor to verify that everything is running as expected.

For companies that are looking for a fire-and-forget solution, SaaS wins hands down. The dashboards built for the cloud-based systems are typically designed to offer cross-platform compatibility. That means you can have folks in the office using Windows desktops and sharing information with individuals in the field who might be working on mobile platforms based on iOS or Android.


For all the setup headaches that on-premise systems can entail, they tend to offer much better customization. Cloud vendors, however, shouldn’t be discounted. There’s a good chance that you won’t require an on-site, customized setup unless your company is heavily into building its own solutions.

One of the main drivers of the adoption of cloud computing is the need for increased cooperation within companies. By moving services and data to the cloud, many businesses have dramatically increased the availability of information throughout their operations. For companies that have interests spread across the country or globe, this can reduce friction.


Every computing system encounters bottlenecks. SaaS solutions are often bottlenecked by network capacity and speed. On-site solutions are frequently limited by the available hardware. Cloud services providers offer solutions that allow clients to throw more resources at big problems when they require speed and power. This sort of instant scalability is hard to replicate at your own location without building your own supercomputing cluster.

Mixed Solutions

Few companies have wholly embraced the cloud-based ecosystems, and almost all operations are likely to end up using some mixture of both solutions. Many offerings take this fact into account. For example, Tableau mixes cloud storage and computing options with a desktop application that blurs the line between on- and off-site solutions. It also is designed to allow users to important local files and connect to remotely served data. SaaS providers are increasingly accommodating toward the needs of firms that have ingrained desktop computing cultures.


SaaS systems are growing in popularity, and many companies are trying to move as much of their BI infrastructure into the cloud as possible. As vendors continue to prove themselves capable of handling concerns about security and availability, this trend is likely to continue over the next five years. Increased competition in the sector should also encourage cheaper and more options, and that’s a win for nearly everyone looking to improve their BI resources.

Setting up a solution can be challenging, especially if you don’t have the right specialists on your team. Optimus information has worked on implementation of both SaaS cloud BI platforms and on-premise solutions, and we have the right BI technical experts to move you forwards without incurring the financial burden of a full time BI staff.

If you have questions about whether a cloud or on-premise BI solution is right for you, contact us today. We’re always happy to help.

(Note: This blog has been updated with new information.)