Cloud vs. On-Premise vs. Hybrid
The first strategic infrastructure decision: Where do your models run? The answer depends on cost, latency, data privacy, and scalability.
The Three Deployment Models
Cloud (AWS, Azure, GCP)
The most popular option for getting started and variable workloads.
Advantages:
- No upfront investment: Pay-as-you-go, ready immediately
- Elastic scaling: Scale GPU capacity up/down in minutes
- Managed services: SageMaker, Vertex AI, Azure ML reduce operational overhead
- Global availability: Deploy models close to users
Disadvantages:
- Expensive at sustained load: Above 70% GPU utilization, cloud becomes more expensive than own hardware
- Data sovereignty: Data leaves your network — GDPR-relevant
- Vendor lock-in: Migration between cloud providers is costly
On-Premise
Own servers in your own data center or colocation facility.
Advantages:
- Full data sovereignty: Data stays in your network — ideal for regulated industries
- Predictable costs: One-time purchase, no variable fees
- Low latency: Direct access without network overhead
Disadvantages:
- High upfront costs: An NVIDIA DGX H100 starts at €300,000
- Maintenance overhead: Hardware, cooling, power, updates — all self-managed
- Slow scaling: Ordering new hardware takes weeks to months
Hybrid (Recommended for 2026)
The combination of both worlds — and the pragmatic sweet spot.
Strategy:
- Process sensitive data on-prem (PII, health data, financial data)
- Offload variable workloads to the cloud (batch jobs, peak loads)
- Edge inference for real-time applications (< 50 ms latency)
Decision Matrix
| Criterion | Cloud | On-Prem | Hybrid |
|---|
| Startup costs | Low | High | Medium |
| Running costs (sustained) | High | Low | Medium |
| Data privacy | Medium | High | High |
| Scalability | Very high | Low | High |
| Time-to-market | Fast | Slow | Medium |
Practical Recommendation
Phase 1 (0–6 months): Start in the cloud. Validate prototypes quickly, understand costs.
Phase 2 (6–18 months): Identify stable workloads and evaluate on-prem for those.
Phase 3 (18+ months): Hybrid architecture with clear assignment: which workloads run where.
Rule of thumb 2026: If your cloud costs are under €50,000/month, staying in the cloud is usually better. Above that, a hybrid analysis is worthwhile.
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Quiz
Ab welchem monatlichen Cloud-Budget lohnt sich typischerweise eine Hybrid-Analyse?