Neither cloud nor on-premises costs less across the board, so compare five-year costs workload by workload. The cloud usually suits email, files and systems people reach from anywhere, because you rent capacity and the provider runs the power and hardware. On-premises still suits equipment-bound systems and servers with supported years left.
I have worked in IT and development since 1998 and hold Microsoft’s Azure Fundamentals certification. Rizonetech is a Microsoft partner, so we will say plainly where the cloud is not the answer. Reviewed 13 October 2026 by Derick Payne, with the published facts read that day.
What do we run in the cloud ourselves?
Our email runs on Microsoft 365. This website runs on Pressable’s managed WordPress hosting, and in October 2026 we moved it from Pressable’s Los Angeles data centre to its Amsterdam one. Jetpack backs it up in real time. The two products we are building, SecureBin and MailMark, are designed for Laravel Cloud, which runs on AWS.
That suits a small business whose work is email, documents and websites. It is one example, not proof that every workload belongs in the cloud.
What does the cloud do better?
- You rent capacity instead of buying it. You avoid buying hardware sized for your busiest day. How flexible the bill is depends on the terms: metered services charge for what you use, while per-user subscriptions and reserved capacity run for a committed term.
- The provider runs the building. Power, cooling, physical security and failed hardware are its job. AWS, for example, says its uninterruptible power supply units “can be engaged for certain functions, while generators can provide backup power for the entire facility”.
- People can reach it from anywhere. Staff working from home or a client’s office sign in to the service, not to a server in your back room.
- A backup can live far from your office. A copy in another region survives a fire or a burglary at your premises.
The cloud does not take over all of your work. Microsoft’s shared responsibility model says that whatever you deploy, you keep responsibility for your data, endpoints, accounts and access management: “you own your data and identities”. Someone in your business, or your IT partner, still decides who can sign in, checks the backups and watches the monthly bill.
When does on-premises still make sense?
On-premises is not obsolete. Keep a system on site when:
- It talks to equipment in the building. A production line or a lab instrument may need a short, reliable link that does not depend on the internet.
- The server has supported years left. If it still has the capacity you need and its future running costs are lower than the alternative, keeping it can cost less than moving.
- A contract says so. Some agreements require certain data to stay on infrastructure you control.
- Your connection cannot carry it. Large files edited all day by people in one office can be slow over a thin line.
How do load-shedding and connectivity change the choice?
The cloud moves the power problem away from your server, but not away from your people. A server room needs a UPS, and often a generator, to ride through outages. A cloud provider’s data centre carries its own backup power. Your staff still need charged laptops, a working router and a live connection to reach anything in the cloud.
Load-shedding has eased, but plan as if it can return. The CSIR counted 6,948 hours of load-shedding in 2023, the worst year on record. By 9 October 2026, Eskom reported “511 consecutive days without loadshedding since 16 May 2025”. Local outages and load reduction still happen in some areas.
Connectivity matters as much as power. If everything moves to the cloud, a single internet line becomes a single point of failure. Plan a second connection, such as fibre with a mobile data backup, and ask your provider whether its equipment near you has backup power. Then write down what each person does when the office has no power or no line, and test it.
What do cloud and on-premises cost over five years?
Price both options for the same workload, capacity and recovery needs, in rand, with VAT treated the same way on both sides. Five years is our comparison horizon, not a replacement date. SARS’s Interpretation Note 47 gives tax write-off periods of five years for servers and three for personal computers; how long your own server stays supported is a separate question.
For each option, fill in four lines:
- One-off costs. For the cloud, the migration work and the weeks of running old and new side by side. For on-premises, any new hardware and its installation.
- Running costs for each of the five years, estimated year by year: licences or subscriptions, power, connectivity, support and backups.
- Replacements due within the five years: hardware at the end of its life, or software leaving support.
- What you are left with: the resale value of any hardware you own at the end.
The five-year total is the one-off costs, plus the five years of running costs, plus the replacements, minus the resale value. Money already spent on a server you keep is not part of the sum; count only what each option costs from today, using quotes for your own systems.
Write down the assumptions behind each year: price increases, growth in users and storage, and the billing currency. If a service is billed in US dollars, its rand cost moves with the exchange rate, so work out a second, higher-cost case as well. Record each quote’s commitment term, renewal date and rules for reducing or cancelling. Microsoft, for example, notes that on some billing accounts, once the short cancellation window has passed, an annual subscription paid monthly is charged “each month for the remainder of your subscription term”.
What the cloud costs to run depends on what you rent. With software as a service, such as Microsoft 365, the provider runs the application, and you manage accounts, access and data. With a cloud virtual machine, Microsoft’s shared responsibility model leaves the operating system, applications and network controls with you, so you still patch, monitor and respond to incidents. Managed platforms sit in between.
| Cost | On-premises | Cloud |
|---|---|---|
| Hardware | Servers, storage and network gear, and replacing them | Included in the service charge |
| Software | Licences, renewals and upgrades | Subscriptions per user or per resource |
| Power | The server, its cooling, the UPS and generator fuel | Included, but your office devices still need power |
| Connectivity | Enough for remote access into the office | Enough for everyone to work online, plus a backup line |
| Support | Patching, monitoring, hardware failures and after-hours callouts | Accounts, access and costs; for virtual machines, also patching, monitoring and incidents |
| Backup and recovery | A copy off site, and restore tests | Often an extra service, and restore tests still apply |
| Data transfer | Usually nothing extra | Depends on the service: check internet egress, backup copies and traffic between regions |
Two South African inputs are easy to underestimate. Electricity keeps rising: Eskom’s direct tariffs rose 12.74% on 1 April 2025, and NERSA approved a further 8.76% for Eskom’s direct customers from 1 April 2026. Municipalities buying from Eskom pay an average 9.01% more from 1 July 2026; if your business buys power from a municipality, cost it on that municipality’s business tariff and fixed charges. And software support ends on fixed dates. Microsoft’s extended support for Windows Server 2016 ends in January 2027, and SQL Server 2016 left extended support in July 2026; after that, security updates come only through Microsoft’s paid Extended Security Updates. A server whose operating system leaves support means spending either way, so that is the natural moment to decide.
Price the cloud side with the Azure pricing calculator or the AWS Pricing Calculator, for a South African region, on the day you decide. A cloud bill nobody watches drifts upward, so give the monthly spend a named owner.
Does keeping data in South Africa decide it?
Rarely on its own. Microsoft Azure’s South Africa North region is in Johannesburg; South Africa West, in Cape Town, has restricted access, for scenarios such as disaster recovery. AWS has one region in Cape Town. Check that each service you need runs in the region before you price it. For a Microsoft 365 tenant provisioned in South Africa, Microsoft stores at rest in South Africa the core data: Exchange Online mailboxes, SharePoint sites, OneDrive files and Teams chats.
A local region does not mean every backup or support process stays in South Africa, so check where each service stores and sends data. POPIA does not, on our reading, require local storage. But section 72 says you “may not transfer personal information about a data subject to a third party who is in a foreign country” unless a condition in the section applies, such as the recipient being bound by “a law, binding corporate rules or binding agreement which provide an adequate level of protection”. Document where your data goes and check transfers with your legal or privacy adviser. We weighed that section when we moved our website to Amsterdam.
Is a hybrid setup right for you?
A hybrid setup may suit a business with both cloud-ready workloads and systems that need to stay on site. A common split puts email and collaboration in the cloud, and keeps equipment-bound systems in the building. It is not a goal in itself: each side needs its own backups and its own owner, and two environments take more looking after than one.
How do you decide, workload by workload?
List each system you run, then answer five questions for each:
| Question | Points to the cloud | Points to on-premises |
|---|---|---|
| Who uses it, and from where? | People in many places | People in one office |
| Does it talk to local equipment? | No | Yes, and delay matters |
| How old are its hardware and software? | Near or past end of support | Years of supported life left |
| What happens when the office loses power or its line? | Work continues elsewhere | The office has backup power and a second line |
| Where must its data live? | A region you have checked | On infrastructure you control, by contract |
FAQ
Is the cloud cheaper than on-premises for a small business?
Not always. Compare the five-year cost of both, including power, connectivity, licences, support and backups, for the systems you actually run.
Does the cloud protect us from load-shedding?
Partly. Your systems keep running in the provider’s data centre, but your people still need devices, power and a connection, and a tested plan for when they lose them.
Can our data stay in South Africa?
Often, yes. Azure, AWS and Microsoft 365 all store data in South Africa. Check each service you use, where its backups go, and what your contracts and POPIA require.
What should you do next?
Find out where your systems stand with the free IT health check. If you lean towards the cloud, read our practical migration guide or the whitepaper on Azure migration and governance, or see how Rizonetech plans a cloud move. We will tell you if a system should stay where it is.
Published 16 June 2026. Last updated 13 October 2026.