On-Premise or Cloud: where should factory data reside?
Inspektion engineering team · Published 7 September 2026 · Last updated 14 October 2026
On-Premise keeps data inside the factory, making it suitable for data that must not leave the organisation. Cloud is more flexible and easier to manage. Choose according to your organisation's data policy.
On-Premise
- Factory data
- Full control
Cloud
- More flexible
- Easier to manage
Summary
- On-Premise means installing the system and storing data on servers in your own factory. Data does not need to leave the organisation.
- Cloud means using servers through an external service provider. It is more flexible and easier to maintain, but the data sits outside the organisation.
- The main deciding factors are the data security policy, the budget and the readiness of the internal IT team.
- No single answer is always right — some organisations choose a mix (Hybrid), according to what suits each system.
How On-Premise and Cloud differ
On-Premise
- Servers are installed and data is stored in your own factory
- Data does not need to leave the organisation, and you have full control
- Requires your own system administration team and hardware investment budget
- Suited to data with high security requirements
Cloud
- Uses servers from an external service provider
- Usage can be scaled flexibly as needed
- No hardware investment of your own, and easier to maintain
- Data sits on the external service provider's system
Summary: Choose according to your data security policy and the readiness of your IT team — some organisations use a mix of both, according to what suits each system.
When to choose On-Premise
An organisation should decide where to install a system based on its data requirements, connectivity and the readiness of its IT team. One example of work installed within an organisation is a P-Chart system for tracking production quality (see the case). The conditions governing which data may be sent to the cloud must be agreed project by project.
When to choose Cloud
Work without strict data security requirements, or organisations without an IT team to look after their own hardware, often choose Cloud because usage can be scaled flexibly and there is no upfront hardware investment. Data conditions and service fees should be checked before choosing a provider.
Factors to consider
- The organisation's data security policy and relevant legal requirements, such as the Personal Data Protection Act (PDPA) [1]
- Budget — compare the costs of hardware, licences, services and maintenance over the whole service life
- The readiness of the internal IT team to look after the system
- Information security standards the organisation must comply with, such as ISO/IEC 27001 [2]
Frequently Asked Questions
Can we choose a mix (Hybrid)?
Yes — many organisations keep sensitive data On-Premise and use Cloud for systems without strict security requirements.
Can we move from Cloud to On-Premise later?
Yes. The team will assess a suitable migration approach, but it is best to plan from the start to reduce complications later.
Is On-Premise always more secure than Cloud?
Not always — security depends on how the system is actually managed, not just where the data is stored. Both models need appropriate security measures.
