The debate between on-premise and cloud-based options has intensified as data grows in volume and complexity.
At a basic level, the distinction is straightforward. On-premise systems keep data and applications within a company’s own servers and infrastructure. Cloud-based systems store data on servers owned and managed by third-party providers and accessed over the internet. The value of cloud systems becomes clearer when you consider that AWS, Amazon Web Services, generated more than USD 107 billion in revenue in 2024, with USD 39 billion in operating profit.
The traditional approach: on-premise systems
Historically, companies used micro PLCs for local control and data management, connected to SCADA or DCS platforms. This setup delivers built-in data management, local storage and basic optimisation features for process conditions such as temperature and flow.
Since the arrival of Industry 4.0, there has been a push to digitalise that infrastructure. Companies now incorporate edge gateway technology into PLCs to support the move away from traditional on-premise systems.
Security and control are probably the main reasons some businesses still choose on-premise solutions. Because the data remains on site, there is a perceived security advantage, especially where intellectual property and data breach concerns exist. This is common where strict corporate rules limit external connections.
Integration is another factor. On-premise systems often connect more easily to local systems such as OSI Pi or DCS platforms.
The cost structure usually involves significant upfront capital expenditure to build the infrastructure, but there are no ongoing subscription fees.
Challenges remain. One is the time required to implement the system successfully. Operational costs are also likely to be higher, because local expertise is needed on site for maintenance, software updates and patches. Getting the right scale can be difficult too, and systems are often oversized, creating unnecessary cost.
Cloud-based systems: the innovative option
Speed and scalability are clear strengths of cloud systems. They can be implemented quickly and scaled up or down easily to suit demand.
Cost efficiency is another key reason businesses choose cloud-based systems. Subscription fees exist, but they are often offset by lower operational expenditure such as reduced maintenance.
Integration and data aggregation also become easier in the cloud. Standard technologies such as APIs and MQTT make it simpler to share data remotely with other systems when needed.
The main challenge is that a reliable internet connection is essential.
Concerns about intellectual property or sensitive production data can often be addressed by sending only the data that needs to go to the cloud.
Similarly, using an independent 4G or LTE connection to access the data helps preserve the integrity of IT or DCS systems.
Differences in perspective: IT vs. OT
An interesting dimension to this debate is how IT and OT departments view the options. IT teams, usually operating under corporate control, tend to emphasise security, software approvals and governance. OT teams, often led by field engineers or maintenance teams, prioritise smooth production. That difference can create friction when new technologies are being introduced.
What's best for you?
The right data management choice depends on your company’s needs, available budget and long-term goals.
What is clear is that as your business evolves, your data management needs will evolve with it. Whether you lean towards on-premise, cloud-based or a hybrid model, it is important to stay informed and stay flexible. A clear understanding of each option is essential if you want to justify a decision that aligns with your company’s strategy.