Before comparing options, clarify the terms. Public cloud uses a provider’s shared infrastructure. Private cloud is reserved for one organisation, but it can be hosted by a provider or operated locally. On-premises means the infrastructure runs at your own facilities. A private cloud can therefore also be on-premises.
The decision comes down to data handling, performance, operating responsibility, and total cost.
| Option | Why consider it | What to check |
|---|---|---|
| Public cloud or managed AI service | Rapid setup and flexible capacity | Data handling, service limits, and usage charges |
| Hosted private cloud | Infrastructure dedicated to your organisation | Isolation, administrator access, and contractual responsibilities |
| On-premises | Local operation and direct infrastructure control | Staffing, maintenance, capacity, and recovery arrangements |
Treat this as a shortlist, not a final verdict. The actual architecture, contract, and operating controls matter more than the deployment label.
Follow the data
Check where documents, prompts, answers, and logs go. A locally hosted model does not make the whole application private if another component sends information to an external service. Assess the entire system and its dependencies.
Test actual response times
Local infrastructure is not automatically faster. Retrieval, model size, available hardware, and request queues all affect the experience. Test a realistic workload, including busy periods.
Compare the complete bill
For on-premises deployment, include hardware, power, cooling, maintenance, staff, and future expansion. Comparing a cloud invoice with only the purchase price of a server gives an incomplete picture.
Your decision checklist:
- What information may leave your environment?
- Who may administer the service and inspect its logs?
- What response time must it meet under peak demand?
- Who will maintain and recover it?
- What is the total cost at expected usage?
- How will capacity grow if adoption increases?
Use these answers to eliminate unsuitable options before comparing vendors or buying hardware.
Related: Cloud and platform engineering