Legitimate Reasons to Have On-Premises Software

There are many reasons why organizations choose to deploy traditional legacy server software on-premises. Some are driven by sound technical, cost, and licensing decisions while others are personal preference or convenience. The following section provides a list of legitimate reasons for maintaining an on-premises footprint.

Technical Reasons

Technical reasons for deploying and retaining on-premises server software include the following:

Synchronizing on-premises Active Directory identities with Entra ID (in Microsoft’s cloud) is often used by organizations that use Microsoft 365 or other solutions running in Azure. The challenge is that synchronizing Entra ID between Azure and on-premises currently requires at least one on-premises Exchange server per domain, a technical requirement that Microsoft has only recently fixed, and one that leaves customers open to on-premises server challenges.

Regulatory restrictions instituted by governments and organizations that require applications and data to be hosted in a closed-off physical location or under certain supervisory or logistical constraints. For example, most power plants require an air-gap environment to protect operations and customers in some countries cannot use Azure services because regulations require solutions to be hosted in a geographic area where there is no Azure datacenter.