Small and medium businesses (SMBs) handle an enormous and rapidly growing volume of data. One analysis by IDG found that SMBs manage about 47.81 TB of data on average, and that volume is expected to grow by over 50% in just 12–18 months.
Some SMBs have reported annual data growth rates above 200% as their digital records, emails, and files multiply.
With data volumes exploding, choosing the right storage solution becomes mission-critical. The way you store, protect, and access your data can directly impact your costs, productivity, and even business continuity. There’s no one-size-fits-all answer—the NAS vs. cloud storage decision depends on your business’s unique needs.
Below, we break down each option’s offerings and compare them against key factors to help you make an informed choice.
What is NAS?
Network-Attached Storage (NAS) is a dedicated storage device that connects to your local network, providing a centralized place for multiple users and systems to store and retrieve files. A NAS functions as a specialized file server optimized for data storage and sharing. It makes data available to authorized users from any connected device on the network, enabling easy file sharing and collaboration within the organization.
Small businesses use a NAS appliance in the office to serve as a central file repository, a local backup target, or to host shared media and databases. NAS has everyday use cases that include file storage and sharing, maintaining active archives of business data, serving multimedia files to teams, and acting as a backup hub for disaster recovery.
In practice, installing a NAS is often plug-and-play – connect it to your office network, configure users/permissions, and your team can start saving files to a shared drive. Because the data stays on-site, businesses retain complete control over security settings and data management. (We’ll discuss the implications of that control more in a moment.)
What is Cloud Storage?
Cloud storage refers to data storage provided by an external service provider (like Amazon Web Services, Microsoft Azure, Google Cloud, etc.), where your files are kept in the provider’s data centers and accessed via the Internet. In a cloud storage model, businesses offload their data to remote servers owned and managed by the provider. These servers (often in multiple locations) store your data and ensure it’s available on-demand whenever you need it, typically through web interfaces or client applications.
Because the cloud provider maintains the infrastructure, you don’t need any on-premise hardware beyond an internet-connected device. Cloud storage is essentially cloud-based data hosting – you pay for the storage capacity and services you use, and the provider handles the heavy lifting of maintenance, hardware upgrades, and scaling.
Key benefits of this model include:
- Virtually unlimited storage capacity on demand
- No upfront hardware costs
- Ubiquitous accessibility
Your team can access cloud-stored files from anywhere – at the office, at home, or on the road – if they have an internet connection. Providers also build in features like multi-region redundancy (for reliability), automated backups, and robust security measures for data in transit and at rest.
In short, cloud storage offers convenience and flexibility: you get pay-as-you-go scalability, 24/7 accessibility, and minimal IT maintenance. Of course, those advantages come with trade-offs in areas like ongoing cost and control, which we’ll explore in the comparison below.
Comparison: NAS vs. Cloud Storage
Now, let’s compare NAS vs. cloud across the factors that matter most to SMBs. Each option has pros and cons in terms of cost, scalability, performance, data security, and support for remote work. Understanding these differences is key to determining which storage solution best aligns with your business needs.
Cost Considerations
NAS (On-Premises): With a NAS, most costs are upfront (CapEx) – you purchase the hardware and drives, and possibly pay for installation. After that, ongoing expenses are relatively low (mostly electricity, occasional drive replacements, and IT maintenance). There are no monthly storage fees to a provider. This means a NAS can be very cost-effective over the long term, especially if you need to store large volumes of data. While initial costs are higher, on-premise solutions can become more economical for large-scale or long-term storage needs.
One industry survey noted that on-prem storage is often cheaper in the long run when storing petabytes of data.
However, SMBs should budget for the NAS device’s lifecycle – e.g., hardware upgrades every few years as capacity needs grow or warranty periods end.
Cloud Storage: Cloud computing shifts costs to an operational (OpEx) model—you typically pay a monthly or usage-based fee. There’s no big upfront hardware cost, which lowers the barrier to entry.
This is great for cash flow and scalability, but the flip side is that costs accumulate continually. Over time, storing large amounts of data or keeping data for many years can become expensive in the cloud. You’ll pay for storage capacity, and possibly for data transfers or API calls (sometimes hidden fees that show up later).
Many businesses have learned that cloud costs can surprise them: nearly half of cloud buyers spent more than expected on cloud services in 2023, reports the IDC.
Without careful management, costs can add up for large data volumes – for example, storing tens of terabytes in the cloud and frequently downloading that data (egress fees) can quickly inflate your bill. On the other hand, if your storage needs are modest or you only need to retain data for short periods, cloud storage’s pay-as-you-go model might save you money versus investing in hardware.
Bottom line: NAS requires a bigger upfront investment but offers predictable costs thereafter, whereas cloud storage has a low entry cost but potentially higher long-term TCO if your data footprint or access needs grow significantly.
Scalability
NAS: Scaling an on-prem NAS usually means adding hardware. Need more capacity? You might add extra hard drives to the NAS (if slots are available), attach an expansion shelf, or eventually buy an additional NAS unit. Many NAS systems support “scale-up” (add larger drives) or even “scale-out” clustering of multiple devices.
This provides decent flexibility, but it’s not instantaneous – you have to plan for and procure the new hardware. There’s also an upper limit to how much you can scale a given NAS box (based on bays or supported expansion).
In practice, this means NAS scaling is slower and more resource-intensive than cloud. You have to anticipate growth to avoid running out of space, and each expansion can incur downtime for installation. It can be done quickly in some cases (for example, popping in a new drive might take only minutes), but if you underestimate your needs, achieving cloud-like scalability on-prem “can be more complex and expensive” for the same level of expansion.
Cloud Storage: Highly scalable – this is one of the cloud’s biggest strengths. You can increase or decrease storage capacity on-demand with a few clicks, and the provider allocates the infrastructure. There’s effectively no hard limit; you get as much storage as you’re willing to pay for. This makes the cloud ideal for businesses with fluctuating storage needs or rapid growth.
If you suddenly need to onboard a huge dataset or experience a data spike (for example, taking on a large project or seasonal sales spike), cloud storage can accommodate it immediately. An e-commerce SMB, for instance, preparing for a holiday season surge, can quickly scale up its cloud storage and bandwidth to handle the load and then scale back down afterward to avoid unnecessary costs.
In contrast, doing that with on-prem hardware would require buying capacity for the peak (which might be underused afterward). Cloud’s elasticity also means you don’t pay for unused headroom—you can dial resources up or down quickly to match current needs.
Bottom Line: Cloud storage’s adaptability is a huge advantage for an SMB that is growing or uncertain about future storage demands.
Performance (Speed & Reliability)
NAS: A NAS on a local area network often wins when it comes to raw speed for local users. Data travels over the LAN (which could be gigabit Ethernet, 10 Gbps, or higher), yielding fast transfer rates and low latency for on-site employees. Applications that require real-time data access or high I/O throughput – such as HD video editing, large database operations, or CAD rendering – can perform well with a local NAS, especially modern ones equipped with SSD or NVMe caches.
NAS also lets you work offline from the cloud’s perspective; your team can still access local files uninterrupted if your internet connection goes down. However, NAS performance can bottleneck if too many users or applications hit the system simultaneously. Since it’s a single appliance (or cluster), heavy concurrent access might cause I/O contention and slowdowns, especially for lower-end NAS devices.
Additionally, reliability is in your hands – a NAS can offer high uptime if maintained (and with RAID protection, it can survive a disk failure). Still, you must implement proper backups and possibly a secondary NAS for failover if you need near 100% availability.
Cloud Storage: Cloud storage performance has improved greatly, but your internet bandwidth and latency to the cloud data center ultimately limit data access. This is usually fine for everyday office documents and moderate file sizes – employees won’t notice much difference opening a cloud-hosted spreadsheet versus one on a NAS, aside from a slight delay.
Large file uploads/downloads might take significantly longer over the internet than over a gigabit LAN. Also, if many users are accessing large files concurrently via the internet, your router or ISP bandwidth could become a chokepoint.
In short, cloud storage trades some performance for flexibility—it is “good enough” for many business applications but not the absolute fastest option for huge files or real-time processing.
It’s also worth noting reliability: top cloud providers promise 99.9%+ uptime, with data redundantly stored across multiple servers or sites. Your data is less likely to be lost due to hardware failure (since the cloud replicates it), and disaster recovery is built-in. Yet, outages can still occur if the provider has an issue (rare, but they happen) or if your local internet goes down, cutting off access. As one analysis put it, a disadvantage of cloud storage is potentially lower performance than on-premise storage for demanding workloads.
Conversely, an advantage is that the cloud has massive infrastructure to balance loads dynamically, so you’re unlikely to hit a resource ceiling the way you might with a single NAS device.
Data Security & Compliance
NAS (On-Premises): With a NAS, data security is entirely under your control. All your files reside within your facility, on the hardware you own. This can be an advantage for companies that must meet strict data privacy regulations or have policies against storing data off-site. You can implement whatever security measures you deem necessary – network firewalls, user access controls, encryption on the NAS, and physical security like lockable server rooms – without relying on a third party. If proper security protocols are followed, keeping data in-house can mean more protection than using a public cloud.
It’s easier to ensure compliance with specific regulations (HIPAA, GDPR, etc.) when you completely control where data is stored and who accesses it.
That said, “with great power comes great responsibility”: you must handle all security and backups in-house. The data could be permanently lost if the NAS device is stolen or destroyed in a fire and you don’t have an off-site backup. Also, maintaining strong security requires keeping the NAS firmware updated, managing user credentials, and guarding against internal threats. Many SMBs do fine with this, but it requires diligence.
Cloud Storage: Security is a shared responsibility. The cloud provider implements robust baseline security – data centers have strict physical security, storage systems use encryption (often by default), and providers undergo audits/certifications for compliance (ISO 27001, SOC 2, etc.).
In fact, 60% of C-suite executives cite security as a top benefit of cloud computing – ahead of even cost savings – mainly because leading providers invest heavily in cybersecurity and reduce the chance of human error.
Cloud Zero
Leveraging a big provider’s security infrastructure for SMBs with limited IT security expertise can instantly elevate your protection. However, you do give up a degree of direct control. You must trust the provider’s measures and ensure your cloud usage (account configurations, user access policies) aligns with compliance needs. Less control over nuanced security settings and regulatory compliance is a trade-off with cloud storage.
In summary, cloud storage offers strong security out-of-the-box and can offload much of the security burden (patching, physical safety, etc.) to the provider. Yet, for highly sensitive data or ultra-strict compliance scenarios, some businesses still prefer the peace of mind of keeping data on-prem where they have total oversight.
Often, a hybrid approach is used: keep the most sensitive data in a NAS, and use the cloud for less sensitive information or backups.
NAS vs. Cloud Storage – Key Differences at a Glance
| Aspect | NAS (On-Premises) | Cloud Storage |
| Cost | High upfront cost (hardware purchase), but low ongoing costs (power, basic maintenance). Can be more cost-efficient in the long run for large data volumes. | Pay-as-you-go pricing with no initial hardware investment. Low entry cost, but ongoing monthly fees. Costs can scale up with data growth or heavy usage (potentially more expensive long-term for big data needs). |
| Scalability | Limited by hardware – to expand, you must add drives or devices manually. Scaling can be slower and requires planning/procurement. Eventually may hit capacity limits without new hardware. | Virtually unlimited – you can scale storage up or down on demand. No practical capacity limit; the provider handles expansions instantly. Ideal for unpredictable growth or seasonal demand spikes. |
| Performance | Fast local network speeds and low latency for on-site users (great for large files and real-time access). Performance stays consistent on LAN; not dependent on the internet. However, hardware can bottleneck under heavy load, and uptime relies on in-house measures (RAID, backups). | Internet-dependent speeds – adequate for most tasks but higher latency for large or I/O-intensive workloads. Cloud data centers offer high bandwidth, but your experience depends on your internet connection. Providers ensure high availability and automatically manage hardware failures behind the scenes. |
| Data Security & Compliance | Complete control over security. Data stays on-premise, which can simplify privacy compliance and data residency requirements.You set the security protocols (firewalls, encryption, user access). Requires robust in-house backup/disaster recovery planning. | Provider-managed security with enterprise-grade protections (encryption, redundancy, certifications). Easier to enable off-site backups and multi-site redundancy. However, you have less direct control; must trust and configure the provider’s security features correctly. Meeting certain compliance mandates may require careful setup or may be more challenging in multi-tenant environments. |
| Accessibility | Local access by default – great for on-site teams. Remote access possible via VPN or special setup, but not inherent. External sharing is manual. If internet is down, local users still have access. | Access from anywhere—designed for remote work and multi-location collaboration. It is easy to share links with external partners. Users can work from home or on the go with equal access. Requires internet; limited or no access during internet outages. |
Dell PowerStore Prime for NAS – An SMB-Friendly On-Prem Solution
For SMBs that find NAS appealing but worry about getting “enterprise-grade” capabilities, Dell’s PowerStore Prime offers a compelling modern NAS solution. Dell PowerStore is an all-flash storage array platform known for high performance and flexibility, and the new “Prime” iteration (introduced in 2024) is tailored to be even more adaptable and future-proof.
Dell describes PowerStore Prime as “the next evolution in all-flash storage” with an adaptable, intelligent, and continuously modern architecture. In practical terms, the system is built to evolve with your business – it uses modular hardware and all-inclusive software, so SMB customers can run on the latest technology with minimal disruptions.
From an SMB perspective, PowerStore Prime brings many enterprise-level benefits down to a small-business scale. It delivers cutting-edge performance – being an all-flash NVMe system, it can handle intense workloads (database queries, virtualization, analytics) far faster than legacy NAS boxes. This is crucial if your SMB deals with large datasets or high transaction volumes. The platform also features advanced data services like always-on deduplication and compression, with Dell now offering up to a 5:1 data reduction guarantee.
Importantly for SMBs with limited IT staff, PowerStore Prime is designed for simplified management. It supports intuitive management via a GUI and even allows running VMware workloads directly on the array (Dell’s AppsON feature), reducing infrastructure complexity. Day-to-day tasks like provisioning storage for new projects or setting up shares for a department are streamlined. Data protection and security are also baked in – PowerStore includes robust security features such as Data-at-Rest Encryption, secure snapshots, and a zero-trust architecture approach to safeguard against unauthorized access.
Crucially, Dell has positioned PowerStore Prime to be attainable for smaller organizations by offering flexible consumption models. Dell introduced APEX subscriptions (storage-as-a-service options) as part of the Prime program.
An SMB could deploy PowerStore on-premises but pay for it in an open model, similar to the cloud, eliminating large capital expenditures. It’s a best-of-both-worlds approach: you get the performance and control of a local NAS with the financial flexibility of the cloud. And if you prefer traditional ownership, Dell’s pricing and configurations for the entry-level PowerStore models are scaled to mid-market budgets, especially considering the value gained from data reduction and long device lifespans.
Dell PowerStore Prime is engineered to fit SMB needs: high-end performance (all-flash speed for fast access), easy scalability as data grows, built-in data security and compliance features, and simplified management and support. It brings an “enterprise” NAS experience without requiring a large IT team. This makes it an excellent option for small and midsize businesses that want the benefits of on-prem storage (speed, control, reliability) while minimizing the usual drawbacks (complexity, inflexibility).
Which Businesses Should Choose NAS?
How do you know if a NAS (on-premises storage) is the right choice for your business? Here are some ideal scenarios for NAS:
- Primarily On-Site Operations
- Large Files or High-Performance Needs
- Strict Data Control or Compliance Requirements
- Limited Internet Bandwidth
- Desire for CapEx Investment over OpEx
- In-House IT Capability
Choose NAS when speed, control, and one-time costs are top priorities and when most of your collaboration happens under one roof. NAS is often the better fit for organizations that need local storage performance or must meet requirements that cloud solutions can’t accommodate easily. Many SMBs start with a NAS because it gives them a reliable, efficient foundation for data storage without recurring fees.
Which Businesses Should Choose Cloud Storage?
On the other hand, cloud storage is ideal for many situations. Consider opting for cloud if you identify with these scenarios:
- Distributed or Remote Teams
- Minimal IT Infrastructure/Staff
- Rapid Growth or Uncertain Demand
- Tight Upfront Budget
- Ecosystem and Integration Needs
- Disaster Recovery and Backup Strategy
Choose cloud storage when accessibility, scalability, and low maintenance are your biggest needs. It’s the better option for organizations embracing remote work, those without the desire or means to maintain hardware, and those that value the agility of on-demand services.
(A quick note: You don’t necessarily have to pick exclusively NAS or cloud. Many SMBs implement a hybrid approach – for example, using a local NAS for fast access to active files, and syncing backups or archives to cloud storage for safekeeping. Hybrid models can combine the strengths of each. However, for simplicity, this article focuses on choosing one primary storage approach.)
vTECH io’s Final Recommendation
Deciding between cloud or NAS storage comes down to evaluating your business’s priorities: Is absolute speed and control paramount? Do you have mostly in-office operations? Then a NAS, especially a modern solution like Dell PowerStore, could be the optimal fit. Or is your team distributed and your focus on scalability and ease of use? In that case, cloud storage may align better with your needs. In many cases, the answer might even be a mix of both.
Rather than choosing isolation, consider contacting an IT solutions partner for guidance.
As a Dell Platinum Partner with deep experience in SMB storage, vTECH io can help you evaluate your options and even design a hybrid solution tailored to your business. We’ve helped organizations weigh NAS vs. cloud storage trade-offs countless times.
Contact vTECH io today to explore Dell NAS solutions that can future-proof your growing business and keep your data strategy on the right track.
