Few services have grown as quickly as cloud file transfer. With cloud computing market revenues growing from $92.4 billion in 2019 to a forecast total of $1.3 trillion in 2028, you’d be forgiven if you were wondering if anyone still maintained on-premises file transfer solutions.
However, our research shows that on-premises file transfer solutions are still going strong and that cloud file transfer tools may be seeing declines in usage.
What percentage of organizations still run on-premises servers?
Analysts currently estimate that cloud-hosted machines handle between one-half and three-quarters of all server workloads, which means that approximately 25% to 50% of servers remain on-premises. So, while cloud-hosted servers represent a large and growing portion of many organizations’ infrastructures, on-premises servers aren’t disappearing at nearly the rate cloud providers would have you believe.
Some data also exists showing that cloud hosting may have peaked. For example, O’Reilly found that recent cloud application deployment actually dropped by 27%.
What are organizations using on-premises servers for?
So, if a significant (and possibly growing) portion of businesses still prefer on-premises file servers, what are they using those tools for? Analysts and system administrators point to a few different scenarios:
Business-specific operational tasks
While most businesses use some percentage of cloud tools, such as productivity or directory software, many find that their daily operations have limited need for exposure to the cloud (and the additional costs and security requirements that might arise).
These organizations typically perform the majority of their production, delivery and business operations in their own facilities and only need to conduct transactional business over the internet. So, for industries like manufacturing, healthcare, law and others, an on-premises file transfer server makes more sense for the relatively limited use case it will see.
Supporting customized environments
Another reason organizations choose on-premises file servers is because of the level of customization of their environment, which may have thousands of company-owned machines running non-cloud-native software. Many organizations built out their environments before cloud options existed, and their infrastructures continue to function effectively. A CIO running an on-premises organization that is achieving good productivity at an acceptable cost will have little reason to move to the cloud, making on-premises file transfer a sensible choice in this scenario.
Support outside of high-speed corridors
Many organizations operate in areas with limited bandwidth and data speeds. For example, an agricultural or manufacturing organization may not see any realistic way to get appropriate speeds to all of its remote facilities, and, therefore, will opt for on-premises systems.
Control over the unexpected
While cloud providers emphasize their reliability and uptime, the unexpected can and will occur. Every service experiences downtime, and when your system goes down due to someone else’s error, there are few feelings worse than having to sit and wait for a cloud provider to solve the issue. Updates can sometimes be even worse, as they are rarely optional or pushed on your organization’s schedule.
On-premises servers allow your organization to schedule maintenance on your own time, with your own staff prepped and ready for any issues that may occur.
Why does on-premises file transfer make sense in 2024?
On-premises file transfer makes sense for the scenarios above, but has a few other advantages over cloud file transfer as well.
Cost
It’s not unusual for a cloud-based organization to see its bills continually rise to the point where they are spending much more than they would have with an on-premises solution. The same is true for file transfer tools. In contrast, a purchased on-premises file transfer solution like Cerberus FTP Server by Redwood does not add costs per user, transfer volume or connection. Most cloud providers will charge for bandwidth, which makes higher volume, larger file transfers quite costly.
Security and Compliance
The more secure your environment must be, the less suitable cloud-hosted environments may feel. On-premises file transfer tools allow you to set up DMZs, enforce your own authentication and encryption policies, run your data loss prevention tools as you see fit and more — without relying on your cloud provider or resolving conflicts between their policies and your own.
You’ll also be 100% in control of your system access, which can make for easier peace of mind and demonstrate compliance where strict access control and audits are required.
High-bandwidth scenarios
If you’re processing high data volumes, you’re likely spending a lot on bandwidth. However, you may be able to improve transfer speed and lower bandwidth utilization with an on-premises tool that uses the latest technology, such as UDP or AFT, to improve file transfer speeds.
Stable workloads
Cloud hosting helps you automatically scale to support higher traffic and data volumes. But if you are operating on a predictable schedule with a predictable volume of data, you may not need to pay for that extra capability. Most file transfer tools are quite capable of handling whatever your server can throw at it and will likely be cheaper for predictable workloads.
What industries are best served by on-premises file transfer solutions?
The industries that best meet the need for on-premises file transfer are those that face a combination of the factors we’ve discussed above:
Healthcare: Healthcare is heavily regulated, handles high volumes of sensitive data and is a frequent hacking target. On-premises file transfer tools can help healthcare organizations ensure that data only leaves the organization through approved paths.
Legal: Legal organizations handle large volumes of documents and data that must be kept in the strictest confidence, and the risk of industrial espionage increases in high-profile cases. On-premises file transfer makes sense for legal organizations because it reduces the risk of leaked information and ensures clients, staff and other parties can only access files approved for transfer.
Manufacturing: Manufacturers often operate in areas where cloud infrastructure is not strong, and primarily run systems that don’t require internet connectivity. These organizations may need to transfer CAD-CAM files or inventory information via electronic data interchange, but these exchanges can be handled by an on-premises file transfer solution without exposing the rest of the facility to any threat.
Government: Government agencies have high requirements for security, and most often operate across diverse geographies, which makes cloud service performance uneven at best.
What is the future of on-premises file transfer?
Our forecast is that on-premises file transfer activity will remain about equal to cloud transfer. There are simply too many use cases where cloud file transfer is not the best fit, and organizations will always prefer to have more control over their data rather than less. In fact, Citrix found that 94% of respondents have moved some processes back on-premises in the last year.
If you’re interested in trying the best-in-class on-premises file transfer solution, start your trial of Cerberus FTP server today. If you’re supporting more cloud-centric file transfer operations, you may benefit from the flexibility of JSCAPE by Redwood.