Navigating the Choice Between Cloud and On-Premises Data Centers in Financial Services

In the dynamic world of financial technology, the decision to deploy infrastructure either on-premises or in the cloud has become a crucial choice for organizations, as highlighted in Fintech Global News. Operational needs, financial considerations, and overall business strategy often drive this decision. Software development company Symfa delves into the growing trend of opting for on-premises data centers.

Alexander Pampurin, DevOps Lead at Symfa, sheds light on why major companies are increasingly favoring on-premises data centers. He explains the benefits and potential challenges associated with this shift.

Symfa recently collaborated with a global insurance service provider, which initially adopted a hybrid model utilizing both cloud and on-premises data centers. However, over time, the client found that on-premises servers offered numerous advantages that extended beyond financial considerations. Key reasons for this transition include:

Data Security and Confidentiality:

Companies handling sensitive information, such as insurance service providers, prioritize data security and confidentiality. On-premises data centers offer greater control and reduce data vulnerability, which is vital when managing vast amounts of personal and financial data.

Long-term Savings:

Despite the upfront costs associated with procuring hardware for on-premises data centers, the long-term savings can outweigh the initial investment. The insurance customer’s case study demonstrates a payback period of approximately five years, making a strong case for the cost-effectiveness of on-premises infrastructure.

Transitioning from Cloud to On-Premises Data Centers: Main Challenges:

While on-premises data centers offer compelling advantages, transitioning to them comes with its own set of challenges. Managing infrastructure in a cloud environment differs significantly from on-premises management, requiring a deeper understanding of clusters, infrastructure maintenance, and security considerations. Adequate training for IT and DevOps specialists is crucial during this transition period.

The shift to on-premises data centers demands a comprehensive understanding of cluster functioning and infrastructure maintenance, unlike the simplicity of cloud infrastructure management. Adequate training is essential to address issues promptly and ensure smooth operations.

Furthermore, the transition involves a shift in approach towards Infrastructure as Code (IaC) writing. While cloud environments may use Terraform for automatic results, on-premises infrastructure relies on Ansible, requiring manual understanding and implementation.

The decision to transition from the cloud to on-premises data centers is a strategic move that necessitates careful planning and consideration. While cloud infrastructure remains easier to maintain, tools like Metal as a Service (MaaS) are emerging to facilitate the management of on-premises infrastructure. Organizations must be prepared for a gradual transition, acknowledging both the potential challenges and benefits along the way.