Cloud vs. On-Premise Servers: Which One is Right for Small Businesses?
Got a message from Jess, owns a café and a little design outfit in Prahran.
She says: “Our server’s slow. Files load like so slow. Should we move to the cloud or keep this server?”
What We Mean by ‘On-Premise’ Versus ‘Cloud’
On-Premise (on-prem) = your own box in the back room. Maybe a rack, maybe a second-hand tower — doesn’t matter. You manage it. You own it.
Cloud = someone else’s box, in a data centre — Sydney, maybe Singapore. You pay to use it. There are no boxes onsite in your office.
Why On-Prem Still Matters — Especially Now
Turns out — not everyone’s tossing their servers.
A recent Liquid Web survey found 86% of businesses still use dedicated servers. Even small businesses — 68% say they do. And more moved back from cloud in the past year. Why? Control, pricing, compliance, performance.
So yes — cloud is trendy. But on‑prem isn’t dead.
What I Wrote on the Whiteboard for Jess
Pros of On-Premise
-
You own it. No rent, just power.
-
Works offline — no internet, still works.
-
Control — stick your own firewall, set your rules, do what you want.
-
Consistency. No surprise bills or usage spikes.
Cons of On-Premise
-
Big upfront cost. Servers + UPS + setup = $4k–8k easy.
-
Maintenance required. Someone needs to patch it, monitor it, clean the dust.
-
Risks at the site. Fire, flood, spill — all possible.
-
Remote access is finicky. VPNs, ports, remote desktop — happens, but setup needed.
What the Cloud Brings
Pros of Cloud
-
Low to no upfront cost. Pay as you go — no server to buy.
-
Fast scaling. Need more storage or power? Flip a switch.
-
Backups and redundancy built in. Most providers replicate your data.
-
Anywhere access — staff can log in from home, café, worksite — without VPN config.
Cons of Cloud
-
Monthly bills that stack over years. $50–$150/user/month adds up fast.
-
Dependence on internet. No net, no access.
-
Data lockdowns & lock-ins. Some providers make it hard to migrate off.
-
Less control. You rely on their security — better be configuring it right.
Hybrid: Best of Both Worlds (Sometimes)
Recent reports say hybrid setups are becoming how smart businesses operate in 2025. Keep sensitive or local-heavy data on-prem, shift email, backups, CRM to cloud.
Example: A small legal firm I know kept a local NAS for big case files — synced to SharePoint for access and backup. Works well.
Quick Cost Comparison for Jess’s Setup
-
On-Prem server refresh — estimate: $5,200 for decent hardware, setup, UPS. Spread over 5 years = $87/month + your time.
-
Cloud-only — ~6 users, email + storage + Teams: about $100/user/month → $7,200/year.
-
Hybrid = on-prem file cache + cloud email/backup → ~$3,900 capex + ~$3,600/year.
Not perfect numbers, but gives the feel.
What I Asked Jess to Think About
-
Team size — <10? Cloud’s easy. >20? On-prem might make sense.
-
Internet reliability — weak or NBN outages? Lean local.
-
Data rules — legal, finance sectors may need data at rest inside office or in Australia.
-
Budget style — big one-off or small recurring?
-
Support setup — can she patch, update, clean drives at 2 am?
What We Both Agreed On
Jess’s net was decent, she hates big upfront bills, staff work onsite and from home, and projects include design files (large mostly).
Plan: Move mail to cloud (Microsoft 365), backup to cloud, keep compact on-prem NAS → thing for big files and print caches.
We taped out week for migration — 1 day onsite setup, weekend cut over.
Final Thoughts
-
Cloud is tempting. Easiest for remote access, zero hardware, managed security. But it can cost more long term.
-
On-prem costs upfront and needs love. But you’ve got control.
-
Hybrid is realistic for small biz: keep what needs to stay local, move everything else off.
-
And keep backups — doesn’t matter where your data lives. Cloud isn’t auto-backup.
Need Help Choosing or Setting Up Your Server?
We have been doing this for years at Computer Technicians. We help small business setup from scratch. So if you need help setting up your local server or migrating to a cloud one, get in touch with one of our local technicians on 0484 357 559 or fill in the form below.
