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Data Warehousing: The On-Prem vs. Cloud Debate

Like | By  Public Sector Network | April 22, 2021

Optimised data warehousing enables easy access to accurate, consistent and integrated government data for better and faster decision making. 

After a year as turbulent as 2020, Public sector organisations across the world are facing societal, organisational and operational demands for increased financial restraint, efficiency, as well as more citizen-centric services that lead to positive social outcomes. 

Data Warehousing and Business Intelligence can help organisations overcome challenges by structuring data into meaningful and valuable information by unearthing insights and analysing trends hidden within the large stack of data that governments have gathered throughout the years.  

Most of today’s data warehouses, especially in the public sector environment however, cannot support the ingest of data in real-time, and are plagued by inconsistent and duplicate data. 

With efficient data warehouses a critical component of business intelligence and analytics operations, we’re seeing a recent focus on modernisation and transformation of data warehouse systems and architecture.  

One debate that that rages fiercely though is where the best place to host your warehouse is. Ask around and there will be strong advocates for both the on-prem vs. cloud options.  

With so many differences between organisations and new technology, there is most definitely not a one-size-fits-all solution. The key is to instead look for a solution that will help your business to save costs and increase efficiency. The aim here isn’t to make a decision for you – as noted each department has unique needs – but to equip you with information to approach your journey. 

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On-Premises: Benefits 

Greater control: Staying on-prem means you stay fully in control of your data (which can be a double-edged sword in certain circumstances) and in highly regulated sectors like government this is crucial for maintaining privacy and security. 

Legacy Technologies: Almost all public sector agencies are limited by legacy systems and processes. A shift to the cloud may find data incompatibility gaps and restrict usage. By staying on-prem you build around your systems to suit your unique operating environment.  

Increased Security: Organisations that have extra sensitive information – such as government – must have a certain level of security and privacy that an on-premises environment provides. Despite the promise of the cloud, security is the primary concern for many industries, so an on-premises environment, despite some if its drawbacks and price tag, makes more sense. 

Speed: Locating all hardware and tools on premises alleviates concerns over network latency, although some data sources may be off-site, accessible only over the net. Keep in mind, though, that other factors may impact performance more than network latency. This is especially true if your on-prem solution is not sized properly. 

Governance: Data governance and regulatory compliance often are easier to achieve using an on-premises data warehouse. You know exactly where your data is located with an on-prem data warehouse. 

On-Premises: Cons

Larger Capital Expenditure: In an on-premises environment, resources are deployed in-house and within an enterprise’s ICT and data infrastructure. On-premise systems often require upfront purchases leading to increased capital expenditure.  

Maintenance Costs: Deploying on-premise software means your department is responsible for ongoing maintenance costs like server hardware, power consumption and space. Long-term this potentially becomes a problem, especially for smaller departments or local governments with limited budgets.  

Security Complexities: Those eagle-eyed readers will have noticed that security is on both lists. Why? Because data security is a primary concern at the moment, especially following recent breaches in the Australian Federal Government. On-prem security requires dedicated resources. If not effectively managed with the right level of expertise your department risks significant exposure. 

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Cloud: Pros 

Cost Savings: Requiring almost no upfront costs the on-demand pay for only what you use model of cloud storage shifts capital costs to maintenance costs, giving agencies greater flexibility with their ICT budgets. 

Business Continuity and Disaster Recovery: The ability to failover to a public cloud service provider in the event of an outage or breach in private systems enhances business continuity strategies. Off-site locations for disaster recovery help to mitigate single points of failure, which are seen as the bane of any disaster recovery plan. 

Scalability: As your business changes, you’ll likely have to purchase new software or hardware to accommodate large-scale growth if you have an on-premise warehouse. But a cloud warehouse eliminates that need entirely, making scaling up or down much easier. 

 Visibility & Accessibility: Cloud-based solutions offer unparalleled visibility through real-time capabilities. Real-time data access means better accuracy, a smart supply network and an advanced operating model. Accessibility similarly increases with applications available anywhere at anytime via any device or a web browser.  

Maintenance: Since it is a hosted software, there is no need to worry or invest time in the maintenance of the software or the hardware it is installed on. Cloud service provider is responsible for compatibility and any upgrades. 

Cloud: Cons 

Control: In a cloud computing environment, the question of ownership of data is one that many companies – and vendors for that matter, have struggled with. Data and encryption keys reside within your third-party provider, so if the unexpected happens and there is downtime, you maybe be unable to access that data. 

Customisation: Clouds offer less flexibility. When working with legacy systems like most government departments are you’re left with the challenge of data and systems not aligning with more modern cloud-based platforms. 

Security: Trusting another vendor to responsibly store your organisation’s data off-site leads to an entirely new set of security concerns. The cloud requires a leap of faith that the chosen vendor has a watertight security policy with integrated data protection mechanisms.  

Why Not Both?  

That’s an excellent question. Hybrid data warehousing models have emerged as a ‘have your cake and eat it too option’ which offers a balance between on-prem and cloud.  

According to Xplenty, in a hybrid strategy, you use cloud repositories for day-to-day storage, with specialist on-premise data warehousing for: 

  • Sensitive data that you don’t want to travel off-network 
  • Personally Identifiable Information (PII) that you may not be able to transmit for compliance reasons 
  • Data related to low-latency processes 

This approach can help to resolve specific security, compliance, or performance issues that may arise when using the Cloud, while still offering the Cloud’s flexibility. 

What solution is your department leveraging? Is it the right one? Join us at the upcoming Business Intelligence and Data Warehousing Virtual Event on May 5th 2021 to debate this topic with your public sector peers.  

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