What are the main differences between cloud-based and on-premises data warehouses?

Even though on-prem analytical environments and data warehouses can still make sense if your data is highly sensitive and you want to stay independant from the Big Tech companies, for most of organizations however this is a no brainer: cloud-based data warehouses are way more flexible, scalable, easier to maintain, secure, highly-available to name a few. You can (finally!) spend more time creating value for your users and less time maintaining complex hardware and software items.

Cloud based DW architecture if done correctly can help to reduce the cost significantly compared with an on premise solution. With a Pay as you go model, we can selectively use the services and capacity without worrying about the time and effort to setup new services. With increasing need to use AI/ML/Gen AI solutions, organisations are now moving from the traditional EDW to a data lake or data lake house and for that cheap storage is a critical component which is easily obtained, scaled and integrated with other components as and when needed with a cloud based architecture with very less hassle.

Cloud-based data warehouses offer greater scalability and lower maintenance burden, but potentially higher long-term costs. On-premises data warehouses provide more control and customization, with potentially lower long-term costs, but require more infrastructure management.

Cloud-based data warehouses, hosted by third-party providers, offer dynamic scalability, predictable cost structures, managed services, accessibility from anywhere, and robust security measures, while on-premise data warehouses require organizations to manage their own infrastructure, leading to higher upfront costs, scalability challenges, and greater maintenance responsibilities.

The Cloud Data Warehouse tools are scalable and adopting to new innovations including AI and ML capabilities whereas On Premise solutions are not much scalable and also adopting to new technology takes more time and cost more than Cloud based solutions

In cloud based data warehouse, you must use a cloud provider to get all resources - nets, storage & processing- and control it; while in the on-premise data warehouse, you depend of the infrastructure team to get all resources and you must implement a mechanism to deploy and manage it. In on-premise option, you are slow to implement it and use a new resources; while cloud option, you are fast to implement and manage it because the resource are available faster.

Cloud Based: Scalable on-demand, easily scale up or down their resources based on changing needs. With Cloud based environment you can have global team as resources can be accessed remotely Cloud services often follow a pay-as-you-go model, allowing organizations to pay only for the resources they use. Cloud solutions typically offer built-in redundancy and disaster recovery capabilities On Premise: Organizations have full control over their infrastructure. They can customize hardware, software, and security protocols according to their specific requirements. Solutions have perceived security advantages. Infrastructure can be high, long-term costs, update or upgrade is difficult and Costley Maintenance and disaster recovery is expensive

As your business grows and data volumes increase, you can seamlessly scale your data warehouse to accommodate evolving needs without disruptions or lengthy upgrade cycles.

I totally agree that the advantage of Cloud-based data warehouses who offer scalable, on-demand resources, providing elasticity and cost efficiency through pay-as-you-go models. In contrast, on-premises solutions require upfront investment, lack scalability, and demand manual infrastructure management, potentially hindering agility and cost-effectiveness.

By and large Cloud warehouses would scale better than on-prem. Similar scalability could be achieved on on-prem but an organization needs to be at a matured implementation of Software Defined Infrastructure (SDI) and most of the organizations are just starting to get their feet wet with SDI. So in this case I would say that Cloud Data Warehouse can scale both horizontally and vertically much faster than most of the on-prem.

AWS has dedicated a separate region for US Government (following big contract from CIA) with most secured cloud compute environment, but not everyone is CIA... For most part cloud providers offer comparable security safeguards as any highly secured on-prem infrastructures. However, there are certain attack vectors (like hidden external communications in a multitenant cloud) that are unique to Cloud and an organization relinquishes control/visibility. As long as an organization understands structural and operational nuances of Cloud and take take common sense, appropriate safety measures that are customized to cloud, security shouldn't be blocker for cloud adoption

Security and Compliance: Cloud-based: Cloud providers invest heavily in security and offer a wide range of security features to protect your data. However, some organizations might be concerned about storing sensitive data in the cloud. Cloud providers offer various compliance certifications, but you'll need to ensure they align with your specific data security and regulatory requirements. On-premises: On-premises data warehouses give you complete control over your data security. You can implement your own security policies and access control measures. However, this also means your IT team is solely responsible for maintaining security patches and staying ahead of evolving cyber threats.

Cloud providers often invest in specialized hardware optimized for data processing and analytics workloads. Cloud-based data warehouses enable real-time analytics capabilities, allowing organizations to analyze and derive insights from streaming data sources with low latency.

Overall, while on-premises data warehouses offer the potential for high performance with sufficient optimization, cloud-based options provide a compelling alternative with superior performance, scalability, and access to provider expertise, making them well-suited for dynamic and evolving data needs.

Organizations can scale resources up or down dynamically based on demand without incurring the overhead of hardware procurement, deployment, and maintenance.

Ease of Use and Expertise: Cloud-based: Cloud data warehouses are generally easier to set up and use. Cloud providers handle most of the management tasks, allowing your team to focus on data analysis. However, some level of cloud expertise might be needed to configure and optimize your cloud data warehouse environment. On-premises: On-premises data warehouses require significant technical expertise for installation, configuration, and ongoing maintenance. This can strain your IT resources and slow down time to insights.

Users can securely access data and analytics tools through web-based interfaces or client applications, enabling remote work and fostering collaboration among distributed teams.

Cloud-based: Cloud data warehouses offer greater accessibility and integration with other cloud services and data sources. They often provide built-in integrations with data lakes, analytics tools, and machine learning services. On-premises: On-premises data warehouses may have limitations in terms of accessibility and integration with cloud-based services and may require additional effort to integrate with external systems and services.

Deployment Speed: On-Premises: Typically involves longer setup times due to hardware provisioning and configuration. Cloud-Based: Rapid deployment with minimal setup, as cloud services are readily available. Geographic Reach: On-Premises: Limited to the organization's physical location. Cloud-Based: Offers global accessibility, enabling data processing from anywhere. Vendor Lock-In: On-Premises: Provides flexibility but ties organizations to specific hardware and software choices. Cloud-Based: May involve vendor lock-in, but cloud providers offer various services and integrations.