Inference in Local/On-Prem DCs
Many enterprises choose to run AI inference workloads inside their own local or on-premises data centers. This approach offers tighter control over data security, sovereignty, compliance, and cost predictability. Unlike hyperscale inference, which serves global APIs, on-prem inference is tailored to enterprise-specific datasets and business processes. Industries such as finance, healthcare, and government rely heavily on local inference for mission-critical applications.
Overview
- Purpose: Enable organizations to run inference workloads privately, often for compliance or cost reasons.
- Scale: Ranges from small server clusters to 10–20 MW enterprise AI halls.
- Characteristics: Controlled environments, enterprise integration, often hybrid (connected to cloud APIs).
- Comparison: Unlike hyperscale inference, on-prem inference prioritizes privacy and integration with enterprise IT over elastic global scaling.
Common Use Cases
- Healthcare: Medical imaging analysis, EHR data inference, HIPAA-compliant LLMs.
- Finance: Trading models, risk scoring, fraud detection inside sovereign DCs.
- Government: Classified inference on air-gapped systems.
- Manufacturing: Predictive maintenance and quality control in smart factories.
- Legal & Compliance: Document review, contract analysis, private AI copilots.
Bill of Materials (BOM)
Domain |
Examples |
Role |
Compute |
NVIDIA A100/H100, AMD MI300, Intel Gaudi, on-prem GPU clusters |
Accelerators sized to enterprise-scale inference |
Networking |
Enterprise LANs, InfiniBand for GPU clusters |
Interconnect inference servers and enterprise IT |
Storage |
Enterprise SAN/NAS, NVMe storage arrays |
Hold model weights and enterprise datasets |
Frameworks |
ONNX Runtime, Triton, Hugging Face Optimum |
Enable optimized inference inside private DCs |
Orchestration |
VMware, Kubernetes, OpenShift |
Integrate inference workloads with enterprise IT ops |
Security |
HSMs, zero-trust, sovereign key mgmt |
Protect sensitive enterprise and regulated data |
Facility Alignment
Deployment |
Best-Fit Facilities |
Also Runs In |
Notes |
Healthcare AI |
Enterprise DCs |
Hyperscale (via hybrid) |
HIPAA requires local control for PHI |
Financial Models |
Enterprise DCs, Colo |
Hybrid IT |
Low-latency risk and fraud inference |
Government / Classified |
Air-gapped Gov DCs |
None |
Runs entirely inside sovereign networks |
Industrial IoT |
Enterprise DCs |
Edge DCs |
Factories running inference close to OT systems |
Legal & Compliance |
Enterprise DCs |
Hybrid IT |
Contract review and GRC AI copilots |
Key Challenges
- CapEx: GPUs and accelerators are expensive to deploy at scale.
- Utilization: Enterprises may underutilize GPU clusters compared to hyperscalers.
- Expertise: Running AI inference stacks requires specialized skills.
- Compliance: Local workloads must align with sector regulations (HIPAA, SOX, GDPR).
- Hybrid Complexity: Balancing on-prem inference with cloud APIs for overflow or specialty models.
- Energy & Cooling: Enterprise DCs must retrofit to handle GPU rack densities.
Notable Deployments
Deployment |
Operator |
Scale |
Notes |
JP Morgan AI Risk Models |
JP Morgan |
Enterprise DCs |
On-prem inference for credit/risk scoring |
Epic EHR AI Assist |
Epic Systems + Hospitals |
Enterprise DCs |
Inference on patient data under HIPAA |
DoD AI Pilots |
US Department of Defense |
Air-gapped |
Inference in classified government facilities |
Siemens Factory AI |
Siemens |
Enterprise / Industrial DCs |
Predictive maintenance and quality control |
Legal AI Copilots |
AmLaw 100 firms |
Enterprise DCs |
Private inference for contracts and discovery |
Future Outlook
- Hybrid AI: On-prem inference augmented by hyperscale overflow via secure APIs.
- Sovereign AI: Growth of private LLMs deployed in sovereign clouds or local DCs.
- ASIC Adoption: Enterprises adopting inference-specific ASICs (Groq, Tenstorrent, etc.) for efficiency.
- Digital Twins: Enterprises integrating inference into simulations and IoT twins.
- Sustainability: Push for efficient GPU cooling and carbon-aware inference scheduling.
FAQ
- Why run inference on-prem? For data security, compliance, sovereignty, and cost predictability.
- Which industries use on-prem inference most? Healthcare, finance, government, manufacturing, legal.
- How big are on-prem inference clusters? From small GPU racks to tens of MW for large enterprises.
- Is on-prem inference cheaper? Often yes for steady workloads; cloud remains better for bursty demand.
- What’s next? Enterprise adoption of sovereign AI stacks and hybrid inference architectures.