Self-hosted vs. cloud for medical device AI: how to choose

When a medical device company evaluates AI procurement tools, the deployment question comes up fast: cloud or self-hosted? The answer depends on your security posture, regulatory environment, IT capabilities, and budget. Here's the framework for making the decision.

Cloud deployment: the default for most teams

Cloud deployment means the vendor hosts and manages the software. Your team accesses it via browser. The vendor handles infrastructure, updates, scaling, and security patches.

Advantages:

• Zero infrastructure management — no servers to provision, patch, or monitor
• Automatic updates — new features and security patches deploy without your IT involvement
• Elastic scaling — handles peak load (e.g., 20 simultaneous tender responses) without pre-provisioning
• Lower upfront cost — subscription pricing instead of infrastructure investment
• Faster deployment — live in hours, not months

Concerns:

• Data leaves your network — requires trust in the vendor's security practices
• Dependency on vendor uptime — if the vendor goes down, you can't process tenders
• Limited customization — you use the vendor's configuration, not your own
• Regulatory complexity — may require cross-border data transfer agreements

Self-hosted deployment: maximum control

Self-hosted (on-premise) means the software runs on your infrastructure — your data center, your private cloud (AWS VPC, Azure VNET), or your physical servers.

Advantages:

• Complete data control — nothing leaves your network
• No cross-border transfer concerns — data stays where you put it
• Custom security policies — integrate with your existing SIEM, access controls, and audit systems
• Customer-managed encryption keys — you control the keys, the vendor can't access data
• Regulatory simplicity — "the data is in our data center" answers most compliance questions

Concerns:

• Infrastructure overhead — servers, networking, monitoring, patching are your responsibility
• Update management — you manage the update cycle, which means testing and deployment scheduling
• Scaling limitations — peak capacity must be pre-provisioned
• Higher total cost — infrastructure + operations + IT staff time
• Longer deployment — typically 2-6 months vs. hours for cloud

The decision framework

Choose cloud if:

• You respond to fewer than 30 tenders/month
• Your IT team is focused on clinical systems, not SaaS infrastructure
• You're in markets with clear data transfer mechanisms (EU-US SCCs, etc.)
• Speed to value matters — you need results in weeks, not months
• Your vendor has SOC 2 Type II and contractual security guarantees

Choose self-hosted if:

• Your security policy prohibits sensitive data in third-party cloud environments
• You operate in markets with strict data localization (China, certain government contracts)
• You have dedicated IT infrastructure and DevOps capability
• You need customer-managed encryption keys (CMEK)
• Contract value justifies the infrastructure investment (typically $500K+ annual)

The hybrid option

Some vendors (including MedStrato) offer a hybrid approach: the application runs in the vendor's cloud, but sensitive data processing happens in a customer-controlled environment. This provides most of the operational simplicity of cloud with the data control benefits of self-hosted. It's the fastest-growing deployment model for security-conscious medical device companies.