On-premise (closed-circuit) AI is a deployment in which the model and the data that feeds it run on the organization’s own infrastructure — its own servers or data center. Chats, documents and code never leave the organization’s boundary; nothing is sent to external services such as OpenAI, Microsoft or Google.
How it differs from cloud AI
| Dimension | Cloud AI | On-premise AI |
|---|---|---|
| Where data lives | Provider’s servers | Your own servers |
| Dependency | Subscription, internet | Installed system, can run offline |
| Ownership | Rent | Permanent installation |
| Compliance (KVKK/GDPR) | Depends on provider | Under your control |
When to choose it
- When data sovereignty and privacy come first (healthcare, finance, defense, industry).
- When regulation requires data to stay in-country or in-house.
- When a permanent asset is preferred over an ongoing subscription.
An on-premise deployment is typically grounded in the organization’s own knowledge via RAG, and in the strictest scenarios fully isolated from external networks via an air gap.