When thinking about a product analytics solution, an essential component of the process lies in deciding between two types of data storage: cloud or on-premise.
Each has its advantages and disadvantages depending on a number of factors, such as the stage or size of a business, budget, etc. Before we can tackle these variables, we should understand what each option entails.
‘On-premise’, or on-prem as it’s often referred to, is pretty true to its name as it involves hosting data on-site, on a physical server generally located within an organization’s premises. Internal IT resources are responsible for the development and maintenance of these servers, ensuring that it remains secure.
This setup typically means that an organization has full access and ownership of its data infrastructure.
Cloud storage is a third-party service in which data is accessed via remote servers hosted on the Internet. This data, often stored in servers across numerous physical locations, allows organizations remote access from any location with a device connected to the Internet.
The third-party offering this service is responsible for the infrastructure and security protocols.
It has to do with security and greater data ownership, with ‘ownership’ being the key word.
a. Provides higher data control
On-premise data storage allows you to manage security protocols according to your specific needs, giving you direct control over your data. If you’re working with customer data or company IP (intellectual property), your main concern would be data privacy and maintaining ownership over that data.
Cloud services include security measures as part of their offering but their infrastructure is applied across their client base, which might be limiting, or affect company policies for larger institutions.
b. Regional regulations are easier to manage
While privacy laws are increasing on a global level, there are still regional aspects that contribute to some complexity in terms of the enforcement of these laws. For example, the European Union’s (EU) implementation of the General Data Protection Regulation (commonly referred to as GDPR) isn’t necessarily observed by cloud data solutions based in the United States (US), like Google Analytics.
c. Offers better ROI
On-premise data storage is generally a more sustainable solution for larger companies or niche organizations as it allows them to manage compliance needs and custom specifications.
It may have larger upfront costs for setting up the necessary infrastructure, but over time, given the custom requirements, it can provide a better return on investment.
If flexibility and agility are required, and with a limited budget, then cloud storage is often the solution.
a. It's budget-friendly
Third parties offering the service manage the infrastructure and security as part of their overall offering and are able to provide these items at a lower cost. Cloud storage is often touted as the preferred solution for small and medium-sized enterprises (SMEs), or startups and software companies for this reason.
b. Offers more flexibility
Smaller companies, or those businesses just starting out, need to be agile. Changes to economic conditions and being able to adjust to growth needs, are more important requirements for their ideal data storage solution.
Cloud storage also allows these companies to operate from their preferred location, whether this is required for remote-working opportunities or to allow for general mobility.
c. Requires less investment
While it does require less monetary investment, Cloud solutions also come with pre-packaged with most security measures in place.
It may not be as customizable as on-premise, but you don’t necessarily need to worry about managing the basic security protocols. There are fewer people and compliance resources needed to maintain data storage on the cloud.
In closing, both on-premise and cloud storage have strong arguments for their use in any product analytics strategy. Each has benefits that could make them the best option based on for your organization’s particular needs and priorities. Ultimately, the final choice depends on your product maturity.