Cloud vs On-Prem Controllers, Tunneling, and VLAN Strategies: Making the Right Wireless Architecture Choices

https://www.linkedin.com/pulse/cloud-vs-on-prem-controllers-tunneling-vlan-making-jarryd-de-oliveira-yyi3emuboe 

When designing enterprise Wi-Fi, one of the most common questions is where to anchor control and how to handle traffic.

Should you adopt a cloud-based controller for simplicity, or deploy an on-premises controller for maximum control? Do you need GRE tunnels, proxy modes, or dynamic VLAN assignments? And in large or complex sites, when does it make sense to consider VXLAN?

These choices matter because they shape how your network scales, how traffic flowsflows, and ultimately, the user experience.

Cloud Controllers -– When They Fit Best

Cloud-managed controllers are appealing for their simplicity, central management and reduced onsite infrastructure.

They shine in:

• Distributed retail chains - wherecentralized ITmanagement teamsacross want a single pane of glass to manage hundreds ofmany small sites without deploying controllers everywhere.sites.

• Hospitality - whereeasy frequentrollout changesof (guest policies, captive portals, temporaryand SSIDs) can be rolled out in minutes across properties.SSIDs.

• Education with multiple campuses - wherereduced cloudIT simplifiesoverhead operationalacross overhead,distributed especially with limited onsite IT.environments.

Pros:

• Lower CAPEX, predictable subscription costs

• Centralized management, rapid feature adoption

• Ideal for multi-site or global operations

Cons:

• Dependency on internet connectivity for management

• Sometimes limitedLimited control over advanced RF and tunneling features

• May benot less suited forsuit environments with strict data residency requirements

On-Prem Controllers - Where They Still Matter

On-premisesprem controllers continueremain to dominate in environmentsvital where reliability,reliability and local breakout and advanced policytraffic control are non-negotiable.critical.

• Logistics & Warehousing - where– AGVs, handheld scannersscanners, and IoT needrequire sub-second roaming without relying on WAN links.roaming.

• LargeColleges colleges& and universitiesUniversities - requiring– dynamic VLANVLANs, assignment,advanced high-scale authenticationauthentication, and complex RF policy enforcement.

• Enterprises with compliance obligations – where traffic mustremains remain on-premonsite for audit or regulatory reasons.

Pros:

• Greater traffic control and advanced feature sets (e.g., tunneling, policy enforcement)

• Resilience against WAN outages

• Better suitedIdeal for ultra-low latency and high mobility

Cons:

• Higher CAPEX and operational overhead

• Requires skilled staff for upgrades and maintenance

• Less agile inthan cloud for rolling out new features compared to cloud

Proxy vs Non-Proxy Modes

Wireless controllersControllers can operate in proxy (tunneled) or non-proxy (bridged/local breakout) modes.

• Proxy / Tunneling Mode – centralizes traffic, great for guest Wi-Fi or compliance.

• Non-Proxy / Local Breakout – traffic exits locally, reducing latency.

GRE Tunnels and Dynamic VLANs

• GRE tunnelsTunnels remain– useful whenfor youcentralizing wantguest toor centralizeservice traffic from distributed APs into a secure data center - particularly for guest traffic or centralized services.center.

• Dynamic VLANVLANs assignment,– onassign theroles otherand hand,policies allowswithout usersmultiple toSSIDs.

  connect
to

the

Use same SSID but be placed into different VLANs depending on their role, device type, or authentication method.cases:

• Hospitality -– staffstaff, vs guest vsguest, IoT allseparation on thea samesingle SSID,SSID.

  separated
dynamically
• by

  Colleges – students, staff, and contractors segmented via RADIUS attributes.

• Colleges - students, staff and contractors connecting to “eduroam” but landing in different VLANs.

• Warehouses – scanners isolated in a dedicated VLAN with firewall exceptions, while corporateVLANs, laptops land in a secure VLAN.VLANs.

VXLAN -– When to Consider It

As networks scale, especially across multiple sites, traditional VLANs hitmax theirout limitsat (4096 IDs max).IDs. VXLAN extendsexpands segmentation by encapsulating L2 frames into L3, providingoffering millions of uniqueIDs.

segments.

Where VXLAN helps:

• Large logistics operations - central DC plus multiple warehouses can– extend tenant isolation withoutacross redesigningwarehouses theand L2data domain.centers.

• Hospitality chains - each property can– maintain isolated guest networks under a shared SSID, without burningVLAN through VLANs.sprawl.

• Higher education -– VXLAN allows flexiblescale segmentation for thousands of student devices, IoT labs,devices and research networks.

VXLAN isn’t necessaryneeded for small or mid-sized siteseverywhere but becomesis invaluable in very large or multi-tenant deployments where VLAN limits and stretch issues surface.networks.

Final Thoughts

Choosing between cloud and on-prem controllers isn’t about which is “better,” but which aligns with the environment.

• Logistics sites– mayoften demandneed on-prem resilience and low-ultra-low latency roaming.

• Retail chains– often benefitbenefits from thecloud agility ofand cloud.centralized management.

• Hospitality – blends both -both; cloud for guest experience,Wi-Fi, on-prem for secure staff traffic.

• CollegesEducation leverage– dynamicuses VLANstunneling, VLANs, and tunnelingeven toVXLAN balancefor scale withand policy control.

By understanding these options - cloud vs on-prem, proxy vs non-proxy, GRE tunnels, dynamic VLANsVLANs, and evenVXLAN VXLAN,- you can design networks that not only work today butand scale gracefully into tomorrow.