On-Premises vs. Cloud HSMs: A Comparison

Organizations rely on Hardware Security Modules (HSMs) to safeguard cryptographic keys and accelerate cryptographic operations for critical applications. HSMs come in two primary deployment models: on-premises HSM appliances installed in private data centers and cloud-based HSM services operated by cloud services providers like Azure and AWS.   This article examines key factors to consider when deciding between on-premises and cloud HSM solutions. 

Overview of HSMs

HSMs are hardened, tamper-resistant devices that provide secure cryptographic key generation, storage, and operations. They protect application keys and sensitive data by isolating them within a secured, access-controlled hardware module.

Common HSM use cases include:

  • SSL/TLS certificate and encryption key management

  • Application-level encryption and signing across industries like healthcare, finance, retail

  • Digital signature operations for code and document signing

  • Payment network transaction processing and PIN encryption

HSMs establish a hardware-based root of trust for cryptographic security. They accelerate compute-intensive functions like encryption and signing using dedicated crypto accelerator chips.

On-Premises HSM Appliances

On-premises HSMs are purpose-built hardware appliances installed in private data centers. They incorporate physical protections including:

  • FIPS 140-2 Level 3 certified cryptographic modules

  • Tamper-resistant and tamper-responsive enclosures

  • Physical intrusion sensors and active anti-tampering mechanisms

  • Strict physical access controls and multi-factor authentication

The hardened chassis isolates keys from external software or network-based attacks. All cryptographic operations occur within the shielded enclosure. This provides maximum protection for sensitive key material.

On-premises HSMs give organizations full control and visibility into the appliance. However, the fixed performance and capacity require scaling by purchasing additional units. Upfront capital expenditure is high, along with ongoing costs for space, power, maintenance, and lifecycle management.

On-premises HSMs are preferable for businesses that need total control over their HSM environment and encryption keys. The assurance level also helps meet rigorous compliance requirements.

Cloud-Based HSM Services

Cloud-based HSM services have grown in popularity as they allow organizations to benefit from HSM capabilities without the need to maintain on-premises appliances. Leading cloud providers offer fully managed HSM solutions that customers access via APIs and management platforms.

Popular cloud HSM services provided by major CSPs (Cloud Service Providers) include:

  • AWS CloudHSM

  • Azure Dedicated HSM

  • Google Cloud HSM

These provide fully managed HSM capabilities through the cloud. The cloud provider owns and operates the physical HSM infrastructure. Customers access it via APIs, SDKs, and management interfaces.

Key benefits of cloud HSM services include:

  • No upfront hardware costs

  • Operating expense reduction since responsibility to operate and maintain the asset is shifted to the provider

  • Usage-based billing model

  • Seamless scaling through the provider

  • Built-in high availability and redundancy


However, customers have less visibility and control over the physical HSM devices owned by the provider. Most cloud HSMs achieve FIPS 140-2 Level 2 or 3 certifications below on-premises HSMs. Multi-tenant HSMs introduce potential risks from data leakage across tenants, but single-tenant options provide full isolation.

Cloud HSMs simplify deployment and TCO (Total Cost Ownership) but may not fully satisfy organizations with stringent compliance and security policies. Assessing the specific cloud HSM service is recommended to ensure it meets requirements.

Interested in the specific cloud HSMs supported for document and code signing? Learn more in our detailed guide on Supported Cloud HSMs for Document Signing and Code Signing.


Key Factors in Comparing HSM Models

Key Factors On-Premises HSM Cloud HSM
Security Requirements • Support higher FIPS 140-2 Level 3 protections.
• Physical appliances minimize attack surfaces.
• Typically reach FIPS 140-2 Level 3.
• Shared cloud environments might have broader attack surfaces.
Budget and TCO • Requires large upfront capital investment.
• Higher operating and lifecycle costs.
• Uses pay-as-you-go model.
• Potentially lower operating costs due to managed services.
Scalability • Requires installation of new appliances for scaling. • Allows seamless scaling through the provider.
Operation Model • Requires dedicated infrastructure and management overhead. • Fully managed by the provider.
Compliance Considerations • Provides fuller control and auditability to meet regulatory policies like HIPAA and GDPR. • Might not provide the same level of control and auditability, depending on the cloud provider and service model.
High Availability • Requires additional provisions for redundancy and high availability. • Incorporates multi-region redundancy for better resilience.

Disaster Recovery in HSM Models

Disaster Recovery Factors On-Premises HSM Cloud HSM
Recovery Time Might be longer due to reliance on physical hardware and manual processes. Typically offers faster recovery due to automated processes and distributed infrastructure.
Data Backup Requires manual backup procedures and off-site storage. Automatic backups and replication across multiple sites.
Cost Can be expensive due to the need for redundant hardware and off-site backup storage. Generally more cost-effective due to built-in replication and backup solutions.
Complexity Can be complex, requiring expertise in both HSM and disaster recovery best practices. Simpler, as many processes are automated and managed by the cloud provider.
Testing Requires periodic manual testing to ensure recovery procedures work. Can be tested more frequently and easily due to integrated tools and automation.

On-Premises offers higher security protections and control while Cloud provides easier scaling, management, and built-in redundancy. Understanding these trade-offs will help determine the optimal HSM deployment.

Weighing the pros and cons across both tables provides a comprehensive view of HSM models. Factoring in priorities around control, cost, scalability, operations, and disaster recovery capabilities will help decide between On-Premises and Cloud HSM solutions.

Choosing the Right HSM Approach

HSMs provide a hardened, trustworthy foundation for cryptographic security. Organizations must evaluate factors like security needs, use cases, cost, and flexibility when determining if a physical or virtual HSM deployment makes the most sense for their requirements. HSMs have become critical data protection and compliance technology for securing sensitive data across applications and industries ranging from healthcare to financial services.

For help selecting the optimal HSM solution for your needs, consult with the experts at SSL.com. With two decades of experience deploying both physical and virtual HSMs, SSL.com can guide you through the process from planning to implementation.

Get assistance today. Fill out the form below to get in touch with our sales team.

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