Cloud vs Local Servers: Weighing up the Pros and Cons

Data management used to be the concern of companies in the IT industry. Yet today, everyone deals in data. Even small businesses manage some 47 terabytes of data, while the average sized company will see more than double the amount, according to a study by Hubspot.

Storage is now on top of the list of most businesses. The most prominent question for many owners is where best to store data: on local machines or migrate to the cloud?

Some 75 percent of businesses still rely on data from local servers. However, an increasing number of IT decision makers see increased use of cloud services in their future. Both options come with their own advantages and drawbacks.

What are Local Servers?

Servers are units of computing hardware dedicated to serving specific tasks. Often these equipment are tasked with managing and processing large volumes of data 24/7.

Also called dedicated servers, local servers are physical equipment purchased solely for the needs of one company. A physical server’s build varies widely based on a business’ computing needs. You could have a couple of towers whirring away in cabinets, or a column of rack servers mounted on a wall.

What is a Cloud-Based Server?

Many users think of cloud servers as nebulous – pockets in the sky where data goes to magically be stored. But “the cloud” is actually millions of square feet of multi-storeyed mega data centres. Each of these buildings houses endless rows of servers, that process massive amounts of data per second.

The Kolos Data Centre in Norway, one of the biggest cloud facilities in Europe, consumes a whopping 1000 megawatts in processing power. A company’s data may be hosted over several locations or virtual servers, depending on their provider’s setup. Think of it as an Uber for data storage, but instead of cars, you borrow hardware.

Now that we’ve gotten the nuts and bolts out of the way, it’s time to talk about the pros and cons of each option.

Local Servers



Local servers, as the traditional choice, already have an ecosystem of experts, maintenance, and auxiliary services built around them. Companies don’t have to look to costly specialists to keep their hardware and software running smoothly.


In the event of power and Internet outages, companies can still keep critical functions running through a backup generator. And when something goes awry, in-house teams can immediately work on a fix – companies don’t have to sit on their hands while waiting for fixes from their service provider. More importantly, a local server also gives organisations full control over data and a better handle on security.


Under national data localisation laws in countries like Russia, China, and some parts of Africa, businesses are required to process and store citizens’ data inside the country. Companies who handle sensitive information will find that having local servers will give them an easier time through different territories.



In-house servers are generally more costly to set up and maintain. An entry-level server, at a minimum, will cost you £400. You can buy the machine pre-made, or assemble it yourself if you have enough technical knowledge.

Total control is also a double-edged sword. Companies are completely responsible for hardware upkeep and software upgrades. Many companies who have local servers usually have dedicated technicians, even entire teams, who make sure data centres run smoothly – for good reason. Unplanned downtime can have sobering effects. British Airways’ infamous outage, which lasted just 15 minutes, cost the company roughly £150million.

There is also energy requirements to consider. Servers are powerful machines that operate 24/7, which can pose a significant draw on your electricity bill. Overheating is also a common issue, and can cause irreparable hardware damage that can bog performance, or worse, put your expensive equipment out of commission. Many server rooms are equipped with a jumble of cooling systems, vents, fans, and AC units, adding to utility costs.


Storage and power needs will change as a business grows or shrinks. Updates are inevitable and tricky, especially for bigger companies. Large organisations looking to scale up or down often need to go through some amount of research, budget meetings, and sign-offs for even simple RAM upgrades or hardware replacement.

Cloud-Based Servers



It’s hard to calculate for the average cost of running a local server because many variables come into play. With cloud services, what you see it what you get. Pricing tiers relatively standardise charges across providers, helping companies make informed decisions and avoid sticker shock.

As companies don’t have to purchase their own machines or spend on the infrastructure needed to support them on-site, maintenance and utility costs also considerably shrink. A tool from cloud storage platform SherWeb calculates that a local server set up that costs $1476 (£1162) monthly would cost only $313 (£246) on the cloud.


Flexible pricing and customisation options allow businesses to scale specs up or down based on demand fairly quickly. You decide which features to add to plans, like server management, more RAM, backup service, SSDs, which gives you better control over server-related spending.


Moving your data infrastructure to the cloud frees IT personnel tied to administrative and maintenance tasks, allowing them to shift more man hours to research and optimisation.



Moving from legacy systems can be costly. They also take time, which affects operations.


Network problems can completely sever you from your data, whilst on-site solutions still support mission-critical systems. Many providers also provision for some downtime in service agreements, which could potentially be a hairy area of debate as more than 80 percent of businesses today require 99.99 percent of guaranteed uptime. Data centres can also go offline through no fault of the business.

Latency is another challenge in using the cloud. While most providers tout speed when arguing the benefits of cloud over local servers, the reality is far from expectations for some. Often, businesses will share server space, which can result in poorer performance if your neighbour is particularly data hungry.


But probably the biggest factor that stops many companies from migrating to the cloud is the inherent security risk to your business critical data. Cloud servers are also typically more targeted by cybercriminals. Companies have to trust that providers have safeguards in place against vulnerabilities. In the event of data leaks, businesses will be at the mercy of providers. However, it is important to note that most reliable providers operate under strict security regulations

Cybercriminals aren’t the only threat to data in the cloud. If you’re a big enterprise in the tech industry, there’s also the risk of giving potential competitors a glimpse into how your business model works. File-sharing company Dropbox famously dropped out of Amazon’s cloud and built their own storage solution after the tech giant built its own file-sharing service.

Hybrid solutions

There is no clear winner between on-site or cloud – the best choice depends largely on a company’s needs. That’s why the common solution today is to cherry pick the best parts of each option and apply by purpose. For instance, while a healthcare company will have no choice but to store private data on-site, they can host non-critical functions to the public cloud, such as their corporate websites.

Foisting most of their data processing onto the cloud may make more fiscal sense for SMBs with limited starting capital and small data requirements. However, businesses may still want to review which tasks and data are best kept on-site for security and smooth operations.