Cloud vs Data Center: Which is Better for Your Business?

Storing and moving data can quickly become expensive for the modern enterprise. Choices of infrastructure, hardware, and software needed to host a powerful data pipeline abound, and many organizations struggle to build a system which is holistic and integrated, as well as cost-effective.

The very first decision a business or organization will face when assembling any IT project is selecting where the data and processing power will physically reside. Obviously, computers, servers, and supporting infrastructure can simply be purchased and set up on-site. However, thanks to advances in virtualization and distributed computing, it is now also possible to build digital systems which are hosted and function entirely on physically remote hardware. 

These two options chart the evolution of the traditional data center into modern cloud data centers (CDC). Knowing the difference between these two overarching types of enterprise computing can help businesses and their shareholders make more informed decisions, setting their data pipeline up for success.

Cloud vs data center: What’s the difference?

A data center is any location, accessible by members of an enterprise, that houses collected hardware and ancillary devices that can run internal networks, host digital systems and applications, or store data

The traditional data center is on-premises, meaning that all of its functionality is contained in a physical site within enterprise office space. A data center might be a few computers under a desk, a climate-controlled room filled with blade servers, or a whole building. It is managed by an in-house IT team employed and paid by the enterprise which owns the data center. 

Meanwhile, a cloud data center (or just the ‘cloud’) serves exactly the same purpose as the traditional data center, but is physically located elsewhere, often even distributed across multiple locations. While the CDC, like the traditional data center, forms the basal IT infrastructure for an organization, it is managed off-site by a third-party company or service provider. In this case, employees and shareholders do not typically see the hardware hosting their systems or applications in person. 

Traditional Data Center

Cloud Data Center (CDC)


On-premises, physically accessible

Virtualized, remote hardware


Internal, business’s responsibility

Outsourced to third-party provider


In-house IT professionals

Employees of the service provider


Co-location makes failures dependent, onus is on the business for downtime and repairs

Provider is trusted to meet its promises of availability and reliability


Business pays directly for planning, people, hardware, software, and environment

Business pays per use, by resources provisioned


Possible, but involves challenges and delay

Completely, instantly scalable


Despite the growing benefits of cloud storage and computation, many organizations choose to retain in-house IT teams and remain on-premises due to the measure of control afforded by the traditional data center. By building and administering their own systems, enterprises can keep complete authority and responsibility over their data infrastructure and its contents. 

When using the cloud, customers depend on their provider to take care of reliability, cybersecurity, and other important aspects of hosting. High availability, performance, and specific or strict compliance requirements can all factor into the decision to use a more traditional data center.  

Whether a data center is on-premises or in the cloud, information security should always be a top priority. Organizations must constantly defend against data breaches while protecting proprietary knowledge and records. Fortunately, both cloud data solutions and the best on-premises data centers boast similar levels of security. 


Planning and building a traditional data center involves some time-consuming work and hefty upfront investment. There are quite a few hidden costs, from administrator pay, to power and HVAC bills, to man-hours spent documenting, communicating, and troubleshooting a traditional data center.

On the other hand, the cloud typically requires no initial investment, and CDC pricing schemes are invariably more transparent and straightforward than estimating the cost of an on-premises data center.

Customers pay their cloud provider for the resources they use, whether computational power or storage capacity. This reduces overall cost of ownership while simplifying accounting and financial planning. The provider also administers and maintains the cloud data center, obviating the need to worry about software updates, tuning, or repair during downtime or outages. 


The cloud model is primarily known as Infrastructure as a Service (IaaS), because customers access flexible, virtualized instances of hardware which a dedicated provider conforms to any requirements. These providers benefit from better infrastructure and resources thanks to their focus on delivering this particular service.

This means that cloud data centers are easy to use, highly customizable to business requirements, and more agile overall than traditional data centers. Tweaking an on-premises system requires work and, potentially, the purchase of additional hardware or software. Meanwhile, in the cloud, users can provision computing resources, networking capabilities, and storage with the click of a button.

It is important to note, however, that though cloud providers support most computing and storage platforms, it is possible for an organization to need such a high degree of customization that the appropriate platform is commercially unavailable. As a result, some enterprises prefer to stick with a traditional data center when building complex or novel data systems.


Because resources in the cloud are on-demand, quickly deployable, and transparently priced, ease of extension is perhaps the primary benefit of using a CDC. Again, scaling a traditional data center involves new planning, new challenges, and new costs, while a cloud can scale automatically, relatively cheaply, and in real time. 

In the age of big data, companies are constantly seeing the volume and complexity of their existing data expand, as well as often discovering entirely new sources. The cloud’s scalability makes it uniquely suited for building future-proof applications, prepared for the continuing growth of data. 

Cloud vs data center: Which is better for your business?

Recently, many organizations have turned to the cloud for their infrastructure needs. CDCs are a good choice for small businesses, which can provision appropriate computational resources without needing to hire IT teams or manage costly hardware. Large, quickly-expanding, and web-based businesses all benefit from the efficiency, scalability, and expertise of cloud providers. Many businesses also find the cloud useful as a tool for disaster recovery, providing a reliable layer of redundancy.

Nevertheless, a vast amount of infrastructure remains on-premises, managed by in-house IT. Large, older businesses with unique use-cases need to manage dependencies more carefully, often finding that the traditional data center remains an appropriate choice as a result. Businesses greatly concerned with security, and absolute ownership over data, usually need a traditional data center as well. 

Ultimately, a hybrid solution is often the most ideal setup for enterprise computing infrastructures. By employing both an on-premises data center and a cloud, organizations can glean the benefits of both, while avoiding their respective disadvantages.

Thanks to scalability and low cost, the cloud can be used for backup or additional storage while mission-critical systems remain on-premises and within full ownership of the business. Certain tasks might run better on local infrastructure while others are more efficiently delegated to the cloud. Finally, with a hybrid solution, high risk and confidential information can be kept reliably contained, while public data is processed and propagated quickly in a cloud. 

Get started with your cloud and data centers

Data centers are the basic infrastructural building block for every organization’s digital projects. While they can be built and managed ad-hoc, the growing availability and performance of CDCs affords businesses a great deal of flexibility, even the possibility of using a powerful hybrid computing infrastructure. 

Talend’s single suite of data integration and data integrity apps allows your enterprise to collect, move, process, and govern data you can trust, whether from on-premise data centers and local systems, or through the internet and cloud platforms. Try Talend Data Fabric todayto securely and seamlessly integrate data across your chosen computing infrastructures at the speed of business.  

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