On-Premise vs Cloud Enclave for CUI Protection

The Compliance Architecture Decision

Every defense contractor facing CMMC certification has to answer a fundamental question: how do you create a compliant environment for handling Controlled Unclassified Information (CUI)?

The two dominant approaches are:

1. Cloud enclave — Migrate CUI workloads to a FedRAMP-authorized cloud like Microsoft GCC High
2. On-premise security — Deploy security controls within your existing infrastructure

Both can achieve compliance. But the right choice depends on your environment, budget, timeline, and operational requirements.

The Cloud Enclave Approach

How It Works

Cloud enclaves like GCC High provide a pre-certified environment that meets many CMMC requirements by default. You migrate your email, file storage, and collaboration tools into this environment, and the cloud provider handles the underlying security infrastructure.

Advantages

• Pre-certified infrastructure reduces your responsibility for physical and infrastructure controls
• Managed updates and patching for the cloud platform
• Built-in backup and disaster recovery

Challenges

• Cost — GCC High licensing is significantly more expensive than standard Microsoft 365. Per-user pricing plus egress fees add up quickly for organizations of any size.
• Migration complexity — Moving to GCC High requires migrating email, SharePoint, and other services. This isn't trivial and often requires specialized consultants.
• Doesn't cover OT — Cloud enclaves protect cloud workloads, but they do nothing for on-premise networks, shop floor equipment, or legacy systems.
• Timeline — Full migration typically takes 3-6 months or more.
• Vendor dependency — Your compliance posture is tied to your cloud provider's certification status.

The On-Premise Approach

How It Works

On-premise security deploys physical or virtual appliances within your existing network to enforce the controls required by NIST 800-171. This includes access control, network segmentation, monitoring, encryption, and logging — all without moving data to the cloud.

Advantages

• Data sovereignty — CUI never leaves your physical control. For organizations with strict data handling requirements, this is non-negotiable.
• Covers OT environments — On-premise solutions can protect shop floor equipment, SCADA systems, and legacy devices that cloud solutions can't reach.
• Lower total cost — Fixed pricing without per-user licensing or egress fees.
• Faster deployment — Purpose-built appliances can be deployed in hours, not months.
• Air-gap compatible — Works in disconnected environments where cloud isn't an option.

Challenges

• You're responsible for maintaining the appliance and keeping it updated
• Physical security of the device is your responsibility
• No built-in cloud backup (but most manufacturers already have backup strategies)

Making the Decision

Choose a cloud enclave if:

• Your organization is primarily office-based with minimal OT
• You're already on Microsoft 365 and the migration is straightforward
• You have the budget for GCC High licensing long-term
• Your CUI is primarily in email and document collaboration

Choose on-premise if:

• You have OT equipment, shop floor systems, or legacy infrastructure
• You operate in air-gapped or restricted environments
• You need to minimize disruption to existing operations
• You need to control costs with fixed, predictable pricing
• You need to be assessment-ready in weeks, not months

Or combine both

Many organizations find that a hybrid approach works best: cloud for email and collaboration, on-premise for network security and OT protection. The key is ensuring that your boundary between the two is well-defined and that access controls span both environments.

The Bottom Line

There's no one-size-fits-all answer to CMMC compliance architecture. But for manufacturers and organizations with complex on-premise environments, the assumption that "you need to move to the cloud" is often wrong — and expensive.

Evaluate both approaches honestly. Consider your timeline, your budget, and the full scope of your CUI environment. The best compliance architecture is the one that actually works for how your organization operates.