Enterprise companies in financial services, healthcare and other regulated industries are increasingly “self-hosting” critical applications and data due to security and privacy requirements, opting to keep customer or patient data behind the firewall in on-prem or private cloud deployments to reduce the risk of a data breach.
A shift to private environments is a growing trend. In a 2024 survey from Citrix, 42 percent of organizations reported that they are considering or already have moved at least half of their cloud-based workloads back to on-premises infrastructures with 94 percent involved in some kind of “cloud reparation” project.
Protection against a data breach is a major reason for the trend. According to a report in Harvard Business Review, more than 80 percent of data breaches in 2023 involved data stored in the cloud. Attacks are unfortunately becoming all too common, as threat actors target enterprise companies with unsecured data, in any industry. A healthcare communications platform that connects providers with patients recently announced a major data breach that exposed the PHI of nearly 1 million patients, resolved only when the platform was restored in a more secure environment. In the largest data breach in the financial services industry in 2024, approximately 17 million customers of a top-ranked U.S. mortgage lender had their PII exposed, including names, addresses, dates of birth and financial account information.
Enterprise companies handle massive amounts of consumer data, much of it sensitive and governed by stringent regulations such as GDPR, CCPA, HIPAA, and other global or local privacy frameworks. SaaS solutions, which store data on third-party servers, raise concerns about compliance and security. Keeping data behind the firewall, marketing and compliance teams maintain tighter control over data storage and processing, reducing the attack surface for potential breaches. This approach not only mitigates risks but also ensures adherence to compliance standards. With consumer trust becoming a cornerstone of brand equity, safeguarding data becomes essential.
Not Your Father’s On-Premises
A modern on-prem solution where an organization keeps its customer and patient data behind the firewall no longer refers strictly to an on-site data center, but rather an organization’s private environment that doesn’t sacrifice cloud-like agility and scalability. In such an environment, tools like hyper-converged infrastructure, private clouds, and containerization technologies (e.g., Kubernetes) empower organizations to deploy and scale applications quickly while retaining full control over their environments. These advancements make on-premises solutions an attractive alternative to traditional SaaS platforms, combining the best of both worlds and allowing for the highest levels of data security.
Regulated organizations realize that enterprise control over a valuable asset – customer data – often outweighs the traditional cited benefits of a SaaS solution, e.g. scalability, cost efficiency and rapid deployment, particularly when an organization’s reputation and financial liability are at stake.
Customization, Control & (Less) Complexity
One drawback of a SaaS solution is that it requires the use of built-in features, which may or may not be compatible with components of an organization’s existing technology stack, such as an analytics platform. This drawback becomes a greater hindrance in an era of rapid change and innovation. Companies increasingly require the flexibility to meet new and evolving use cases, such as quickly rolling out GenAI tools, and a SaaS solution limits flexibility. An on-prem or private cloud environment provides enterprise companies with the flexibility to install and upgrade software as needed, with the freedom and flexibility to configure the software needed for any business use case.
Reduced complexity is another feature of an on-prem system vs. the increased fragmentation that is a byproduct of SaaS proliferation. In a SaaS environment, organizations commonly have to manage multiple platforms, ensure seamless integrations across various applications, and maintain consistent data flows across systems.
In contrast, an on-premises system allows for the consolidation of operations and data within a controlled environment, reducing the complexity of managing disparate systems and minimizing the risk of data silos.
Cost Reduction
While a SaaS application may offer cost savings in the short term, keeping data behind the firewall has several potential cost benefits. This can include ingress/egress and storage charges for cloud data, along with indirect costs for monitoring and managing data compliance and usage. By retaining control over privacy exposure, security, and usage patterns (i.e., who has the right to look at the data, use it, export it, etc.) an organization ensures more direct and often simpler data usage and management costs.
Subscription fees with unforeseen overages and yearly price increases as organizations scale operations also tilt the scale in favor of an on-premises deployment. Companies with stable and predictable workloads often find that owning and managing their infrastructure is more cost-effective in the long run, allowing them to reduce recurring expenses while maintaining operational control.
Play it Safe: Maintain Control over Your Enterprise Data
In summary, the trend of enterprise companies shifting away from SaaS solutions reflects a strategic response to the unique pressures and opportunities within regulated industries, which increasingly require that data never leave the control and oversight of the organization. More and more companies are making the trade-off of potential higher upfront investment to reap the benefits of increased security, control, customization and long-term cost savings that are associated with an on-prem deployment.
By prioritizing data security, operational control, and cost efficiency in an on-premises environment, companies can better align their technology strategies with their business objectives.
