Three ways to deploy enterprise AI

There are three ways to put AI in front of your organisation: rent it over an API, split it across a hybrid boundary, or own it on your own infrastructure. Each is the right answer for somebody. The numbers decide for whom.

The three approaches, plainly

1 — Cloud API. Your users' prompts and documents travel to a provider's infrastructure; answers travel back. Zero capex, immediate start, per-token pricing. The provider holds the working context, and your governance is a contract: retention, residency and training-use promises you must trust and cannot verify from your side of the wire.

2 — Hybrid. The stack is split. Retrieval, redaction and the privacy rail run on your infrastructure; some or all inference is routed out — either to a frontier API for designated task classes, or to rented GPU capacity. Done properly this is policy-routed: sensitive material is grounded and answered locally, and only what policy explicitly permits crosses the boundary, with every routing decision logged.

3 — On-premise. The entire request path — privacy filter, retrieval, inference, validation, audit — runs inside your building on hardware you own. Open-weight models served locally; no egress path to any external provider. In our fail-closed on_prem_required mode, a misconfiguration refuses rather than transmits.

What each costs — with the volumes attached

Cost claims without volumes are how this decision goes wrong, so every figure here carries one.

Below roughly 90,000 queries a month, the cloud API wins. Full stop. No on-premise deployment pays back inside three years at that volume — including the cheapest one we build. A twelve-person team running about 400 queries each per month spends roughly ₹1,200 a month on frontier API access; about ₹43,000 over three years, against ₹8.1 lakh for entry hardware. They should not buy hardware, and we tell them so.

At sustained volume, ownership crosses over. An entry tier crosses over against API pricing in 8–14 months from roughly 0.4 million queries a month. Our mid-enterprise reference fleet (₹41.7 lakh capex) crosses over in about 18 months at 1 million queries a month with 700-token contexts — 12 months at 1.5 million, 9 months at 2 million.

Running costs are smaller than people assume. A departmental node draws about 240 W — cooled by ordinary office air-conditioning, no server room. Our reference fleet's typical draw of 300–500 W costs roughly ₹35,000 a year in electricity; the worst case, flat-out around the clock at about 1.7 kW, is roughly ₹1.5 lakh. One 8×H100 cloud-class server, for contrast, draws 10.2 kW — around ₹8.9 lakh a year before cooling. On-premise enterprise AI does not mean running a datacentre.

What moves the line

Three things drag the crossover earlier, and none of them is hardware price:

Context length. Longer contexts mean more tokens per query at the same query count. Retrieval-augmented work runs long contexts by construction.

Premium model tiers. API pricing scales with the model tier; owned hardware does not care which open-weight model it serves.

Agentic workloads. An agent that chains several model calls per user action multiplies token throughput without multiplying your capex.

If your roadmap includes retrieval over your own documents and agents that act, your token curve is steeper than your query curve — and the crossover is closer than a per-query estimate suggests.

Hybrid, honestly

Hybrid is genuinely right where workloads split cleanly: grounded, sensitive work at volume on your side; occasional frontier-capability tasks routed out by policy. That is our own default posture — sovereign by default, frontier by choice.

Its honest cost is governance: two surfaces instead of one. You must be able to say, per request, which side of the boundary it ran on and why — which is an audit-record requirement, not a slide. If your team cannot evidence the split, hybrid quietly degrades into the cloud approach with extra steps.

The decision, compressed

Start with the sizing, not the software: query volume, context length, concurrency, and the state of your document estate. Those four numbers make this decision for you — and if they say "don't buy," we will say it too.

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Companion pieces: Frontier vs grounded — the wrong axis · The anatomy of an on-premise AI deployment · Operational alpha — the advantage you own