Data Warehouse

Is the On-Premises Data Warehouse Dead?

Actian Corporation

June 26, 2024

Is the On-Premises Data Warehouse Dead?

As organizations across all industries grapple with ever-increasing amounts of data, the traditional on-premises data warehouse is facing intense scrutiny. Data and IT professionals, analysts, and business decision-makers are questioning its viability in our modern data landscape where agility, scalability, and real-time insights are increasingly important.

Data warehouse stakeholders are asking:

  • How do on-prem costs compare to a cloud-based data warehouse?
  • Can our on-premises warehouse meet data growth and business demands?
  • Do we have the flexibility to efficiently integrate new data sources and analytics tools?
  • What are the ongoing maintenance and management needs for our on-prem warehouse?
  • Are we able to meet current and future security and compliance requirements?
  • Can we integrate, access, and store data with a favorable price performance?

Addressing these questions enables more informed decision making about the practicality of the on-premises data warehouse and whether a migration to a cloud-based warehouse would be beneficial. As companies like yours also look to answer the question of whether the on-premises data warehouse is truly a solution of the past, it’s worth looking at various warehouse offerings. Is one model really better for transforming data management and meeting current business and IT needs for business intelligence and analytics?

Challenges of Traditional On-Premises Data Warehouses

Data warehouses that serve as a centralized data repository on-premises, within your physical environment, have long been the cornerstone of enterprise data management. These systems store vast amounts of data, enabling you to integrate and analyze data to extract valuable insights.

Many organizations continue to use these data warehouses to store, query, and analyze their data. This allows them to get a return on their current on-prem warehouse investment, meet security and compliance requirements, and perform advanced analytics. However, the downside is that these warehouses increasingly struggle to meet the demands of modern business environments that need to manage more data from more sources than ever before, while making the data accessible and usable to analysts and business users at all skill levels.

These are critical challenges faced by on-premises data warehouses:

  • Scalability Issues. A primary drawback of on-premises data warehouses is their limited scalability—at least in a fast and efficient manner. Growing data volumes and increased workloads require you to invest in additional hardware and infrastructure to keep pace. This entails significant costs and also requires substantial time. The rigidity of on-premises systems makes it difficult to quickly scale resources based on fluctuating needs such as seasonal trends, marketing campaigns, or a business acquisition that brings in large volumes of new data.
  • Limited Flexibility. As new data sources emerge, you need the ability to quickly build data pipelines and integrate the information. On-premises data warehouses often lack the flexibility to efficiently handle data from emerging sources—integrating new data sources is typically a cumbersome, time-consuming process, leading to delays in data analytics and business insights.
  • High Operational Costs. Maintaining an on-premises data warehouse can involve considerable operational expenses. That means you must allocate a budget for hardware, software licenses, electricity, and cooling the data warehouse environment in addition to providing the physical space. You must also factor in the cost of skilled IT staff to manage the warehouse and troubleshoot problems.
  • Performance Restrictions. You can certainly have high performance on-premises, yet as data volumes surge, on-prem data warehouses can experience performance bottlenecks. This results in slower query processing times and delayed insights, restricting your ability to make timely decisions and potentially impacting your competitive edge in the market.

These are some of the reasons why cloud migrations are popular—they don’t face these same issues. According to Gartner, worldwide end-user spending on public cloud services is forecast to grow 20.4% to $675.4 billion in 2024, up from $561 billion in 2023, and reach $1 trillion before the end of this decade.

Yet it’s worth noting that on-prem warehouses continue to meet the needs of many modern businesses. They effectively store and query data while offering customization options tailored to specific business needs.

On-Prem is Not Even on Life Support

Despite the drawbacks to on-premises data warehouses, they are alive and doing fine. And despite some analysts predicting their demise for the last decade or so, reality and practicality tell a different story.

Granted, while many organizations have mandates to be cloud-first and have moved workloads to the cloud, the on-prem warehouse continues to deliver the data and analytics capabilities needed to meet the requirements of today’s businesses, especially those with stable workloads. In fact, you can modernize in place, or on-prem, with the right data platform or database.

You also don’t have to take an either-or approach to on-premises data warehouses vs. the cloud. You can have them both with a hybrid data warehouse that offers a modern data architecture combining the benefits of on-premises with cloud-based data warehousing. This model lets you optimize both environments for data storage, processing, and analytics to ensure the best performance, cost, security, and flexibility.

Data Warehouse Options Cut Across Specific Needs

It’s important to remember that your organization’s data needs and strategy can be uniquely different from your peers and from businesses in other industries. For example, you may be heavily invested in your on-prem data warehouse and related tools, and therefore don’t want to move away from these technologies.

Likewise, you may have a preference to keep certain workloads on-prem for security or low latency reasons. At the same time, you may want to take advantage of cloud benefits. A modern warehouse lets you pick your option—solely on-premises, completely in the cloud, or a hybrid that effectively leverages on-prem and cloud.

One reason to take a hybrid approach is that it helps to future-proof your organization. Even if your current strategy calls for being 100% on-premises, you may want to keep your options open to migrate to the cloud later, if or when you’re ready. For instance, you may want a data backup and recovery option that’s cloud based, which is a common use case for the cloud.

Is On-Prem Right For You?

On-premises data warehouses are alive and thriving, even if they don’t receive the amount of press as their cloud counterparts. For many organizations, especially those with stringent regulatory requirements, the on-prem warehouse continues to play an essential role in data and analytics. It allows predictable cost management along with the ability to customize hardware and software configurations to fit specific business demands.

If you’re curious about the best option for your business, Actian can help. Our experts will look at your current environment along with your data needs and business priorities to recommend the most optimal solution for you.

We offer a modern product portfolio, including data warehouse solutions, spanning on-prem, the cloud, and hybrid to help you implement the technology that best suits your needs, goals, and current investments. We’re always here to help to ensure you can trust your data and your buying choices.

actian avatar logo

About Actian Corporation

Actian makes data easy. We deliver cloud, hybrid, and on-premises data solutions that simplify how people connect, manage, and analyze data. We transform business by enabling customers to make confident, data-driven decisions that accelerate their organization’s growth. Our data platform integrates seamlessly, performs reliably, and delivers at industry-leading speeds.