Date:
21 Oct 2025
Author:
PREO AG
On-Premise vs. Cloud
Why the cloud is essential, but many still rely on on-premises solutions.
90 per cent of companies in Germany use cloud services, an increase of nine per cent over the previous year, and another 10 per cent plan to do so in the next five years, according to a key finding from the latest Cloud Report 2025 published by industry association Bitkom. Cloud computing has thus finally established itself as the standard for modern IT architecture. Almost half of the 604 companies with more than 20 employees surveyed want to increase their cloud investments in 2025 compared to the previous year, primarily for AI applications, CRM, web conferencing, software development and databases. 50 per cent see the cloud as a key technology for innovation. However, only 19 per cent are pursuing a ‘cloud-only’ strategy.
What may seem contradictory at first glance has good reasons. Although cloud applications have become an integral part of everyday business life, on-premises operations remain relevant in most companies and organisations. In this blog post, we outline five reasons why the majority of companies continue to rely on an on-premises IT infrastructure in addition to a cloud strategy, and what role the use of used software licences can play in this.
Despite dependency – multi-clouds and hybrid clouds are convincing
However, multiple dependency on cloud services and thus on the major US providers is increasingly seen as an existential risk factor: 67 percent say that without the cloud, their business operations would come to a standstill. 64 percent feel compelled to use cloud services because the software they need is no longer available elsewhere. Consequently, 53 percent feel at the mercy of cloud providers when it comes to pricing and contract terms.
It is hardly surprising that more and more IT managers are adapting and diversifying their existing cloud strategies, opting for multi-clouds or hybrid architectures, or moving sensitive business and customer data back from the cloud to their own data centres. This countertrend of so-called repatriation has been observable for some time and has intensified once again with the geopolitical disruptions since the beginning of Donald Trump's second term in office. In addition to laws such as the Cloud Act, it is above all the proximity and influence of the CEOs of the major US hyperscalers AWS, Google and Microsoft that have rightly set alarm bells ringing in many European boardrooms. The issue of data sovereignty has finally reached the political arena and the boardroom. This is leading to a noticeable rethink and is also reflected in the current figures. IT security, data protection and compliance are now considered an absolute must-have in the decision-making process when selecting a cloud provider, with 99 per cent of respondents citing these criteria as important, alongside performance and stability, which are considered equally important.
Five reasons why on-premise software remains an important alternative
The lack of German and European competition to US hyperscalers means that existing dependencies remain in place and the path to true data sovereignty is still a long way off. This is also illustrated by the German Armed Forces' recent decision to rely on Google for its cloud expansion. The federal state of Schleswig-Holstein, on the other hand, is taking the opposite approach: it is saying goodbye to the Microsoft cloud this year and will rely on open source solutions throughout its administration in future. Another example: the largest psychiatric and psychotherapeutic hospital in Rhineland-Palatinate, the Landeskrankenhaus Andernach, recently decided to completely abandon the Microsoft cloud and continue operating on-premises. The reasons: security and availability of extremely sensitive patient and health data, as well as a predictable and, in the long term, more favourable cost-benefit ratio, which includes the sustainable use of used software licences from PREO. You can find out more about this customer case here.
We have summarised what we consider to be the five most important reasons for the future relevance of on-premise software here:
1. Data control and digital sovereignty
Dependence on US providers is currently high, and not only in Germany and the EU. Indian energy giant Nayara Energy recently experienced this first-hand when Microsoft, under international pressure, discontinued all paid services without notice, even though they were fully licensed and paid for. This spontaneous encroachment quickly poses an existential risk. Local solutions under your own control therefore remain an important alternative.
2. Technological & functional requirements
German and European cloud providers are slowly catching up, but they must not lag behind their major US competitors in terms of functionality or performance. Around two-thirds of the companies surveyed in the Bitcom Cloud Report 2025 stated that they would not tolerate any disadvantages. In the meantime, open source solutions and on-premise solutions remain relevant.
3. Cost awareness and added value of older licences
On-premise investments pay for themselves, especially over longer terms. The possibility of integrating used software licences increases financial flexibility: they enable cost-efficient use, especially of established standard software such as MS Office or Windows, offer flexibility in licence management and significantly reduce ongoing licence costs.
4. Strategic flexibility and hybrid IT architectures
The majority of companies already use, pursue or plan to use a hybrid cloud model, in which an on-premises infrastructure is specifically combined with the cloud to minimise dependencies and meet local data requirements.
5. Compliance and governance requirements
It is not only public institutions or so-called KRITIS industries, such as energy, logistics, health, finance or defence-related sectors, that are subject to particularly high requirements for data security, data sovereignty and data availability. Numerous examples from the recent past illustrate the importance of independent local control in meeting existing compliance and governance requirements.
Despite cloud development, on-premises will remain the alternative in the future
The Bitkom 2025 study shows that the cloud is indispensable for almost every company, driving digitalisation and technical innovation forward. At the same time, there are good reasons to continue operating certain applications on-premises in the future: legal sovereignty, functional control, cost optimisation and strategic flexibility. The sustainable use of used software licences further supports this approach: they offer economic advantages in both purchase and sale, licensing security and are a useful addition to hybrid IT strategies.
IT managers or software asset managers who are currently optimising or even rethinking their existing cloud strategy should definitely consider a balanced mix of cloud usage with a targeted on-premises component, making clever use of used licences. This is a balanced and flexible model for meeting the complex requirements of modern enterprise IT.
With PREO, companies are placing their trust in an experienced B2B retailer.
As one of Europe's leading B2B retailers of used software, PREO offers companies, organisations and public administrations a comprehensive range of legally compliant used licences from market-leading manufacturers such as Microsoft, Adobe, VMware, Foxit and ZWSoft. More than 1,000 customers have already benefited from
- significant savings on ongoing licence costs of up to 70 per cent compared to the respective new version.
- legally compliant and audit-proof licence acquisition with maximum transparency in all processing steps, including complete documentation in the PREO licence portal ‘Easy Compliance’.
- personal advice on all questions relating to licence transactions or the integration of used software licences into classic network structures or hybrid cloud models.
- greater sustainability in the IT sector by promoting an active circular economy and reducing the corporate carbon footprint. Speaking of sustainability: PREO is the only reseller of used software listed with a scorecard on EcoVadis, the world's largest provider of sustainability ratings.
- Expertise from numerous reference projects that PREO has already successfully implemented for well-known companies from various industries and sectors.
