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Choosing the Right Server: Data Center vs. Cloud


Once your business grows bigger, you might need a server to store and process data. It can make the whole process easier and more efficient. However, first, you must know which kind of technology to turn to. So let’s look at the main two options – data centers and cloud.

A data center refers to the physical stacks of servers, the hardware that can store all of your data on-site. In comparison, cloud computing is an off-site technology that stores all data online instead of in a physical place.

Both technologies are being used by businesses today, but the cloud has become increasingly more popular. In fact, 61% of businesses shifted their working environment to the cloud in 2020. 

Thus, if you wonder which server type is right for your business, this article will walk you through the aspects that differentiate dedicated servers from the cloud, alongside the advantages and the downsides. 

What Is Cloud Server?

A cloud server performs almost the same as a physical server. Virtualization technology allows these servers to create virtual spaces for separating the storage capacity.

Working with cloud servers means that you use a cloud computing environment, and the place to store cloud servers is called an off-premise data center. 

The cloud server hosting companies are entirely in control of the backend management process of the cloud servers. Thus, choosing a reliable cloud service provider should be a priority. To give you an example, Hostinger provides a great cloud server hosting environment with an excellent uptime guarantee. 

Since cloud servers reside in a virtual environment, they rely on the internet connection. This innovation can be an effective way for businesses to manage, back up easily, and access their data from anywhere.

Types of Cloud Servers

If you are just starting a business, using a cloud server can be a good option because you don’t need much knowledge to start using it. There are several types of cloud servers to choose from.

Cloud Hosting 

If you are just starting a web-based business or application where high availability is vital, cloud hosting can be a good choice. You can have business websites up and running non-stop as your resources are deployed and allocated on multiple physical and virtual servers. 

The hosting providers manage all server configurations and technical settings, so you won’t need technical expertise to process your data yourself. Excellent customer support and tutorial articles can be enough to help you understand how it works. 

Virtual Private Server (VPS) 

A virtual private server comes from separating resources allocation of a physical server using virtualization technology. It copies the functionality of a dedicated server in a virtual environment, thus ensuring dedicated server qualities with the starting price range of around $3 monthly. 

If you run an online business that handles payment and stores your customers’ personal information, a VPS can be the perfect solution. VPS servers are also highly customizable as you have access to the root configuration. Nevertheless, that means you need technical expertise to set up the server. 

Some VPS vendors also provide a managed service, so researching this aspect before choosing your VPS provider is also recommended. 

Cloud Computing Services 

If you intend to work in a cloud environment, consider using a cloud computing service. It is suitable for small to large organizations with a wide range of usage. You can use services with the simplest functionalities for free or at a low starting price.

The most popular types of cloud computing services are:

  • Software as a service (SaaS) – refers to the service that delivers cloud-based software applications that users can access via web browser without downloading it to the local computer. An easy example of SaaS is Google Workspace
  • Platform as a service (PaaS) – describes the software for creating a web application without building the infrastructure from scratch. An example of PaaS is Microsoft Azure
  • Infrastructure as a service (IaaS) lets end-users configure their infrastructure using an application programming interface (API) or dashboard. Meanwhile, the cloud computing provider manages the servers and virtualization technology. One of the IaaS providers is IBM Cloud.

What Is a Physical Data Center?

If your business needs a higher authority over your data processing or often transfers an extensive load of data, you might consider choosing physical servers in a data center. 

In simple words, a data center refers to a place for storing physical servers which function to save an organization’s data. It is also called an on-premise data center because it is generally located in a building. 

A data center consists of these elements:

  • Computing attributes to the memory and processing power that is the core of a data center.
  • Storing refers to the running system that manages the data stored and processed in the memory and multiple data backups.  
  • Networking  indicates the interconnection of the data storage with the outside world using routers, switches, and other tools. 

The important aspects of building a data center are hardware and software resources. Therefore, a data center must have robust security measurements of both factors. 

That said, ensuring the physical servers are safe from natural disasters or fire burns due to high temperatures is equally as important as installing an antivirus for the software. 

Types of Physical Data Centers

Large-scale companies, mainly those that process extensive data storage, can own data centers depending on their capacity and functionality. On the other hand, mid-range to large enterprises generally rent a space in a colocation data center or simply called colo

The cost to use this kind of service ranges from $40 to $300 per unit monthly, depending on the needs and the data center’s location. If you wish to have third-party service providers maintaining and monitoring your data center, there is a managed service. It comes in two options: fully or partially managed. 

The data center providers’ classification based on their infrastructure and data center components falls in tiers: 


  • Tier 1 – means that the data center has no additional power backup or cooling system. It only has the basic capacity, including uninterruptible power supply (UPS) devices.  
  • Tier 2 has additional power and cooling systems if the main ones fail. 
  • Tier 3 describes a concurrently maintainable data center with medium-level backup and cooling systems, as well as other additional safety measures. 


  • Tier 4 – characterizes a completely fault-tolerant data center that is prepared for any situation, guaranteeing the lowest annual downtime risk compared to the other tiers. 

Data Center vs Cloud

This section will walk you through the comparison of the three fundamental aspects to consider when choosing the right server for your business. 

1. Security

Physical servers can be more secure since they use local files to store data and are accessible through a private network. It also ensures complete ownership of the data. 

However, ensuring the safety and security of physical servers can be challenging in other ways. For example, if the temperature isn’t well-maintained, it can cause a fire. Also, protecting a physical data center during a natural disaster is also more complicated. 

On the other hand, cloud computing with its virtual cloud environment can prevent any damages from hardware failures. Also, cloud data centers have a robust backup system to avoid data loss. 

2. Cost

A physical data center costs relatively higher than cloud servers. As the sections above explained, the hardware servers need more maintenance. Also, renting the highest-tier physical data center can cost you a fortune. 

Meanwhile, an organization that rents virtual servers and infrastructure from a cloud computing provider doesn’t need maintenance expenses outside the subscription plan. In addition, it is possible to pay only for the resources you use, meaning you can prevent unnecessary costs from idle infrastructure once your storage needs are low. 

3. Scalability

A well-planned procedure is required before upscaling a physical data center. In short, upscaling or downscaling storage on a physical server isn’t instant, and it comes with more costs. 

Meanwhile, cloud servers can be easily scaled up or down in real-time. One of the strongest benefits of cloud computing is that you can request space extension in no time and scale it back down when you no longer need it. 


Cloud servers can be a good option for small businesses that still don’t have a lot of data to store. It won’t require high technical expertise to manage the data center either. Besides, large businesses can also benefit from cloud servers, especially if the company expands quickly or has an internet-based core business. 

Meanwhile, older or specifically narrowed large niche businesses need physical servers to give them absolute data ownership and management. Also, businesses that work with multiple machines to access the central repository or process big loads of data every day might benefit more from on-premise servers. 

Nevertheless, some businesses use both physical and cloud servers to prevent data loss or hardware failures, so combining both servers for your business is also an option.

Finally, it’s essential to know your business’s objectives when deciding which type of server is the most suitable. Both physical and cloud servers have strong and weak points to consider, so the right option is the one that matches your business needs and capacity. 

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