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Cloud vs. Data Center: What to Consider

Eduardo Vasconcellos
Eduardo Vasconcellos
Business News Daily Contributing Writer
Updated Mar 21, 2022

Cloud storage and data center may seem like similar solutions, but they have significant differences.

  • Cloud storage is a scalable solution with redundancy and anywhere access, but it relies on an internet connection, which makes it vulnerable to cyberthreats.
  • A data center is a fully customizable storage solution over which you have complete control, but it costs more, takes up space, and can only be accessed through an onsite corporate network.
  • Some businesses may be restricted from using cloud storage, based on their industries and government policies and regulations. 
  • This article is for small business owners and information technology (IT) managers considering the benefits and drawbacks of different data storage options.

When storing and accessing massive amounts of your organization’s data, cloud data services are a cost-effective alternative to setting up and running a data center. 

What is a cloud storage service?

A cloud storage service is a version of a data center that is not located on your company’s physical premises. It enables access to your business data via the internet. The cloud provider performs ongoing maintenance and updates, and often owns multiple data centers in several geographic locations to safeguard your data during outages and other failures.

What is a data center?

A data center is server hardware maintained on company premises where you can store and access data through your local network. An in-house IT department typically maintains an on-premises data center.

How to choose a cloud storage service vs. a data center

If you’re deciding between using a cloud computing service and building your own data center, here are three factors to consider, along with the pros and cons of each storage solution.

1. Consider customizability vs. scalability.

A data center is ideal for companies that need a dedicated system to grant them total control over their data and hardware. Because only the company uses this hardware infrastructure, a data center is more suited for an organization that runs many types of applications and complex workloads.

However, a data center has limited capacity. You’re responsible for purchasing and installing additional equipment and the latest technologies if your company needs to expand the data center’s storage and workload.

A cloud-hosted data system has potentially unlimited capacity, depending on your vendor’s offerings and service plans. The disadvantage is that you have less control over the remotely located hardware, since the cloud vendor owns and manages the data center system. 

Furthermore, unless you pay to have a private cloud within the vendor’s network, your company will share hardware resources with other cloud users.

2. Consider your security concerns.

With a cloud vendor, your company will entrust its data to a third party. It’s up to the cloud provider to ensure it has the most up-to-date security certifications. If your cloud resides on several data centers in different locations, each location will need the proper cybersecurity measures.

Anyone with the proper credentials can access your cloud data from anywhere with an internet connection. This is convenient, but it also opens a wide array of access points, all of which must be protected to ensure that data transmitted through them is secure.

A data center is physically connected to your company’s local network. This makes it easier to ensure that only people with company-approved credentials and devices can access stored apps and information. You are responsible for your own security, however. 

3. Consider your costs and budget.

If your company builds a data center from the ground up, that will take a lot of time, and your company will be responsible for the system’s maintenance and administration. Operating a large data center can cost a company $10 million to $25 million per year.

A cloud service is more cost-effective, especially for small companies. It does not require nearly as much time or money to set up and run. The cloud service is available for use almost immediately upon registration. As your company’s data needs change over time, the cloud vendor should be able to scale your service up or down. Most companies have a range of subscription plans to account for this.

Pros and cons of cloud storage

Cloud storage has significant benefits, but it may not suit every business or industry. Here’s a look at the pros and cons of cloud storage. 

Pros of cloud storage

Here are some upsides to cloud storage.

  • Capacity: A cloud data storage system has potentially unlimited capacity, depending on your vendor’s offerings and service plans. If you need to adjust your capacity plan, all it takes is a few clicks.
  • A third party to handle security: With a cloud vendor, your company will entrust its data to a third party. You don’t have to assume total control over data security. The cloud provider must maintain up-to-date security certifications. If your cloud resides in several data centers in different locations, each location will need the proper security measures.
  • Anywhere access: Anyone with the proper credentials can access your cloud data from anywhere with an internet connection. Your authorized employees can access business data from their mobile devices; however, it’s important to train your team on remote cybersecurity best practices if they’ll be connecting on mobile.
  • Low cost: A cloud storage service is cost-effective, especially for small companies. A cloud vendor can scale your service up or down quickly as your business grows. Most companies offer a range of subscription plans to account for this.
  • Easy data recovery: If anything happens to your local machines, cloud storage makes data recovery a breeze. Because your data is stored on the cloud, you can update files and download your most critical media to any device through your  internet connection.

TipTip: An easy backup solution for small businesses is using Google Drive to back up to Google’s cloud.

Cons of cloud storage

Like any tech solution, cloud storage also has some downsides. 

  • Limited control: The most significant disadvantage of cloud storage is a lack of control over the remotely located hardware. You’ll depend on the cloud vendor to provide any customization options to your storage system.
  • Reliance on internet connection: If you use cloud storage, you’ll need a reliable business broadband internet connection. If that internet service ever goes out, your business operations come to an abrupt halt.
  • Online threats and security: While using cloud storage means you don’t have to personally handle network security, lax security is still a huge concern. Because cloud storage is web-based to provide anywhere access, it opens many access points that need protection to ensure the security of data transmitted through them. The unfortunate reality is that once your data is online, it’s under threat of a cyberattack.
  • Compliance and regulatory concerns: Depending on the industry or a business’s location, some organizations require an onsite data center to meet specific security requirements that a cloud service can’t provide.

Did you know?Did you know? The best cloud backup and storage solutions are scalable and let you back up files from anywhere with an internet connection.

Pros and cons of data centers

Like cloud storage solutions, data centers have their pros and cons. 

Pros of data centers

These are some advantages of using a data center. 

  • Full control: A data center is ideal if you require a dedicated system that gives you complete control over your company’s data and hardware.
  • Security: A data center is physically connected to your company’s local network. This makes it easier to ensure that only people with company-approved credentials and devices can access stored apps and information.
  • Increased productivity: A streamlined data center can seamlessly provide information to employees to improve workflows and processes, boosting productivity for your business.
  • No internet requirement: When you use a data center, your entire team can access files through a local area network. If your internet service faces an outage, your team still has access to its files, so they can keep moving on any tasks that don’t require the internet.

Did you know?Did you know? If you use a redundant array of independent disks (RAID) configuration for your storage servers, you can create multiple redundancies that prevent data loss, or even have multiple disks acting as a single volume to deliver fast, high-capacity storage.

Cons of data centers

Data centers have some notable disadvantages as well.

  • Limited capacity: While data centers offer many benefits, they’re limited by their capacity. You’re responsible for purchasing and installing more equipment and updating to the latest technology if your company needs to expand the data center’s storage and workload.
  • Limited accessibility: A data center can only be accessed from within your corporate network. While an onsite data center provides a great corporate storage solution, you’re out of luck if you need to access information while you’re outside of the office.
  • Total cost of ownership: Building and maintaining a data center takes time and money. A large data center can cost a company $10 million to $25 million per year.

Data center or cloud storage: Which is right for your business?

Deciding between a cloud storage solution and an onsite data center comes down to choosing the option that best helps your business succeed with your available resources.

Many small businesses thrive using cloud storage solutions. Cloud solutions handle all aspects of data storage and hardware, so there’s no need for a highly technical IT team. Due to their scalability, cloud services are also an excellent choice for larger enterprises, web-based businesses and SMBs that are expanding quickly. Businesses concerned about disaster recovery may opt for cloud solutions because they offer a seamless way to recover data and applications.

Despite the benefits of cloud storage, many businesses with established on-premises infrastructure are served well by in-house data centers. If a company has an excellent IT department and prioritizes data ownership, control and security, an in-house data center could be ideal.

Hybrid solutions are an option for businesses that want the best of both worlds. With a hybrid model, a business could have onsite servers and use the cloud for backup and additional storage. The data center could run some applications locally and delegate others to the cloud. Highly sensitive information could be housed on company servers, while more public data could be processed quickly via the cloud solution.

Howard Wen and Sara Angeles contributed to the writing and research in this article.

Image Credit:

Rawpixel.com/Shutterstock

Eduardo Vasconcellos
Eduardo Vasconcellos
Business News Daily Contributing Writer
Eduardo Vasconcellos is a veteran copywriter, creative content producer and marketing communications specialist with over two decades experience, able to take complex concepts and turn them into something simple and memorable. By focusing on customer psychology and product benefits, his specialty is crafting full marketing campaigns that follow industry best practices while authentically speaking to a customer’s need.