"The future is in the cloud."
"On-premise is dead."
"If you're not in the cloud, you're obsolete."
How many times have you heard these statements in recent years? Probably too many. And do you know what the problem is? They are all half-truths passed off as absolute dogmas. The reality is much more nuanced. In 2026, companies of all sizes are making different choices: some are migrating everything to the cloud, others are doing the opposite, many are adopting
hybrid approaches. And all of them can be right; it depends on the context. Because the right question isn't "cloud or on-premise?" but "which solution works best for my business, my data, my constraints, and my goals?" Let's try to clarify, without ideologies and with the numbers in hand.
The myth of "the cloud always and anyway" (and why it is dangerous)
Let's start with a premise: the cloud has revolutionized the way we build and manage digital systems. AWS, Azure, and Google Cloud have made infrastructures accessible that once cost millions. Instant scalability, pay-per-use, and the absence of hardware to manage are real and undeniable advantages.
But that doesn't mean it's always the right choice. The problem is that many companies migrate to the cloud out of inertia, because "everyone is doing it," because a consultant said it's mandatory, or because it sounds cool to say "we're in the cloud." The result? After a few months, they discover that
costs have skyrocketed by 200%, that performance has worsened, and that they have tied their business to a foreign vendor.
When on-premise still makes sense (and always will)
There are some scenarios where maintaining in-house infrastructure is not nostalgia for the past, but the smartest choice.
1. Predictable and Consistent Workloads
If your system has stable usage over time—no unpredictable spikes, no extreme seasonality—on-premise can be more cost-effective. The cloud charges you for flexibility. If you don't need flexibility, why pay for it?
2. Compliance Requirements and Data Sovereignty
Some sectors have strict regulatory constraints on where data can physically reside. Healthcare, finance, public administration, and strategic sectors. GDPR imposes limitations on the transfer of data outside the EU. Some countries require that sensitive data remain within national borders.
With on-premises solutions, you know exactly where your data is located. With the cloud, it depends on the provider's data center, their policies, and international agreements that can change (see the American Cloud Act, which allows the US government to access data even if hosted in Europe, if the provider is American).
For some companies, this is non-negotiable.
3. Performance critiche e bassa latenza
Applications that require response times in the millisecond range, real-time processing, access to massive data without network latency: on-premise can be superior. Financial trading systems, industrial control, video rendering, big data processing - in these cases, the latency introduced by the internet connection can be unacceptable. Having storage and compute physically close (or in the same rack) makes a measurable difference.
4. Long-term costs for mature applications.
The cloud makes economic sense when you start, when you need to scale quickly, and when uncertainty is high. But for mature applications, with stable architectures and predictable workloads, the 5-year TCO (Total Cost of Ownership) often favors on-premise solutions. A physical server costs €5,000-€10,000 as a one-time expense, plus €1,000-€2,000 per year for energy and maintenance. An equivalent cloud instance can cost €500-€1,000 per month, which totals €6,000-€12,000 per year. After 2-3 years, you’ve already broken even. After 5 years, the savings are clear. Of course, you also need to consider hidden costs: IT personnel to manage the infrastructure, backup, disaster recovery, hardware upgrades. But for companies that already have competent IT teams, these costs are marginal.
When cloud is the winner
Don't get me wrong: the cloud has enormous advantages in many scenarios. It would be foolish to deny that.
1. Startups and new projects with high uncertainty
If you're launching a product and don't know whether you'll have 100 users or 10,000 in the first year, the cloud is perfect. Start small, scale quickly if needed, scale back if growth slows. Zero upfront investment in hardware that may turn out to be oversized or undersized.
The elasticity of the cloud allows you to test the market without tying yourself to expensive infrastructure. If the product doesn't take off, you've spent little. If it explodes, you scale in days instead of months.
2. Variable workloads and unpredictable peaks
E-commerce with strong seasonality (Black Friday, Christmas), streaming platforms for live events, applications that can suddenly go viral. In these cases, the cloud saves your life.
Example: an e-commerce site that normally serves 1,000 users/day, but during sales serves 50,000. With on-premise, you would have to size the infrastructure for the peak, wasting resources 95% of the time. With the cloud, you automatically scale during peak times and only pay for what you use.
If your team is geographically dispersed—developers in Italy, designers in Spain, remote project managers—having your infrastructure in the cloud simplifies everything. Secure access from anywhere, easier collaboration, no complicated VPNs to corporate data centers.
The pandemic has accelerated this trend. Many companies have discovered that having systems accessible via browser from anywhere is strategic for attracting talent and maintaining business continuity.
4. Managed services and focus on core business
Managed databases, messaging queues, storage, CDN, machine learning, analytics—the cloud offers ready-to-use services that would otherwise require specialized skills to hire or develop internally.
For an SME, outsourcing infrastructure complexity makes sense. You want to focus on your product, your market, your customers. You don't want to become an expert in Kubernetes cluster configuration or database optimization.
5. Disaster recovery and business continuity
Implementing serious disaster recovery on-premises requires secondary data centers, data replication, and complex procedures. With the cloud, you can have geographically distributed backups, automatic failover, and high availability with just a few clicks.
For mission-critical applications where downtime costs thousands of dollars per hour, the cloud offers resilience that would be prohibitively expensive to replicate in-house.
Let's do the math: actual TCO at 3 and 5 years
Enough talk, let's talk about concrete numbers (which are indicative and realistic at the time of writing). Let's compare the total cost of ownership for a typical web application (backend API + database + storage) with a medium-stable load.
Scenario: Management application for SMEs
Requirements:
- Application server (4 CPUs, 16GB RAM)
- Relational database (8GB initial storage)
- File storage (500GB)
- Daily backups
- 2TB bandwidth/month
Option A: On-Premise
Initial cost (Year 0):
- Physical server (or VM on existing hardware): €8,000
- Software (OS, database license): €2,000
- Setup and configuration: €2,000
- Initial total: €12,000
Annual recurrent cost:
- Electricity: €500
- Hardware maintenance: €800
- Backup storage: €300
- Business internet bandwidth: €1,200
- IT staff (share, 10% FTE): €4,000
- Annual total: €6,800
TCO 3 years: 12.000 + (6.800 × 3) = 32.400€ TCO 5 years: 12.000 + (6.800 × 5) = 46.000€
Option B: Cloud (AWS/Azure)
Monthly cost:
- Compute instance (t3.xlarge equivalent): $150
- Managed database (RDS/Azure SQL): $200
- S3/Blob storage: $25
- Automatic backups: $30
- Outbound bandwidth: $100
- Monthly total: $505
TCO 3 anni: 505 × 36 = 18.180€ TCO 5 anni: 505 × 60 = 30.300€
Wait, the cloud seems cheaper! Where's the catch?
The point is that these basic calculations do not include:
Hidden cloud costs:
- Unplanned usage peaks: +30-50% on average cost
- Data transfer between services: +15-20%
- Additional services required (monitoring, log management, security): +20%
- Consulting for optimization and troubleshooting: €3,000-5,000/year
Realistic 3-year cloud TCO: ~€27,000 Realistic 5-year cloud TCO: ~€45,000
So we're basically even. And that's for stable, predictable workloads. If you have unpredictable spikes, the cloud wins. If you have consistent workloads and in-house expertise, on-premises wins.
The smart option, hybrid architectures
The truth is that almost no modern company is purely cloud-based or purely on-premises. Most adopt hybrid approaches, choosing the best solution for each component.
Common hybrid architecture patterns
Pattern 1: On-premises core, cloud services
- On-premises core databases and applications (control, performance, costs)
- Cloud support services (email, document storage, analytics)
- Cloud backup and disaster recovery
Pattern 2: Sensitive data on-premises, cloud processing
- Personal and sensitive data remain on-premises (compliance)
- Intensive processing and machine learning in the cloud (scalability)
- Selective synchronization and anonymization
Pattern 3: Multi-cloud + on-premise
- Different workloads on different providers (best-of-breed)
- Critical data replicated on own infrastructure
- Avoids total vendor lock-in
Advantages of the hybrid approach
Flexibility:
choose the optimal solution for each use case; you are not tied to a single strategy.
Optimized costs:
you only pay for the cloud where you really need it, saving on-premises for the rest.
Easier compliance:
sensitive data remains under direct control, while other data can benefit from cloud services.
Resilience:
if a cloud provider has problems, you have an alternative infrastructure. If your data center has problems, you have failover to the cloud.
Gradual transition:
you can migrate components progressively, testing and validating before committing fully.
How to decide?
Enough theory, how do you actually choose? Use this decision-making framework.
Step 1: Analize your workload
For each application/system, answer the following questions:
Volume and predictability: do users and data grow steadily or in spikes?
Criticality: how much does an hour of downtime cost?
Complexity: does it require rare specialist skills?
Compliance: are there legal restrictions on where the data is stored?
Integration: does it need to communicate with on-premise legacy systems?
Step 2: Calculate your realistic TCO
Do the math, including all hidden costs:
On-premise: hardware, software, energy, physical space, personnel, updates, obsolescence, disaster recovery
Cloud: base costs + peaks + additional services + data transfer + consulting + exit costs (if you want to migrate away)
Project 3 and 5 years ahead. The break-even point is usually between the second and third year.
Step 3: Evaluate risks and constraints
Vendor lock-in: how easy/costly is it to change providers or bring services back in-house?
Skills: do you have (or can you hire) the skills to manage on-premise? Or to optimize the cloud?
Scalability: do you need to grow 10x in the next year, or is growth gradual?
Resilience: is a single point of failure acceptable?
Step 4: Start hybrid and test
Don't make irreversible choices right away. Start with a hybrid approach:
- Non-critical workloads on the cloud to test providers and actual costs
- Core business on-premises where you have total control
After 6-12 months, use actual data to assess whether to ramp up the cloud or consolidate on-premises
Need help choosing?
If you are considering how to structure your digital infrastructure—whether for a new project or an existing migration—don't make choices in the dark or based on passing trends.
Write to us for pragmatic, ideology-free advice: we will analyze your workloads together, calculate realistic TCOs, and identify the infrastructure strategy that really works for your business.
Because the right solution is not the “coolest” or “most modern” one.
It is the one that saves you money, gives you control, and allows you to grow without surprises.
