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Choose What Fits Your Needs

Decision Guide•
7 min read
•
January 20, 2025

Local vs Remote MCP Servers: Choose What Fits

All Tools Directory Team
MCPDeploymentArchitectureDecision Guide

Picking where your MCP server runs changes everything—security surface, latency, cost, and how teams work. Use this guide to decide between local, self-hosted/on-prem, and remote/hosted (cloud) deployments.

TL;DR

  • Local (on your laptop/dev box): Fastest feedback, smallest attack surface, but not shareable and limited by your machine.
  • Self-hosted/on-prem: Maximum control/compliance; you manage scaling, updates, and incident response.
  • Remote/hosted (cloud): Easiest to share and scale; introduces network latency and vendor responsibilities.

Decision Framework (Pick by Axis, Not Brand)

Security Surface

Local: Dev machine only. Self-hosted: Your network. Hosted: Provider + config.

Rule: If data can't leave your network, prefer self-hosted.

Latency

Local: Near-zero. Self-hosted: Low (LAN). Hosted: Network hops.

Rule: For tight loops, prefer local or self-hosted.

Cost & Ops

Local: "Free" but limited. Self-hosted: Fixed cost + ops. Hosted: Pay-as-you-go.

Rule: Choose based on team size and growth.

Team Workflows

Local: Solo protos. Self-hosted: Stable teams. Hosted: Multi-team reuse.

Rule: For collaboration, prefer hosted.

Reliability

Local: Laptop sleeps = server sleeps. Self-hosted: You own HA. Hosted: SLAs.

Rule: For production, prefer self-hosted or hosted.

Pros & Cons by Deployment

Local MCP Servers

Pros

  • • Fast dev loop
  • • Easiest debugging
  • • No external exposure

Cons

  • • Not shareable
  • • Fragile
  • • Security tied to one machine
  • • No central quotas/logs

Use when: Prototyping, offline demos, testing new tools safely.

Self-Hosted / On-Prem MCP

Pros

  • • Max control/compliance
  • • Private network access
  • • Predictable performance

Cons

  • • Ops burden (patching, scaling)
  • • Slower to iterate
  • • Capacity planning

Use when: Regulated industries, strict data residency, deep integration with internal systems.

Remote / Hosted (Cloud) MCP

Pros

  • • Easiest to share and scale
  • • Managed updates
  • • Great for multi-assistant reuse

Cons

  • • Network latency
  • • Vendor lock-in risk
  • • Careful IAM required

Use when: Cross-team tooling, variable workloads, fast time-to-value.

Hybrid Patterns (Often the Sweet Spot)

  • Dev local, prod hosted: Build locally; deploy a hosted server for teams.
  • Data stays on-prem, broker in cloud: Hosted MCP calls an on-prem proxy over VPN/peering.
  • Latency-sensitive local tools + remote orchestration: Keep heavy I/O local; coordinate via a lightweight hosted server.

Quick Checklist (Copy/Paste for Your PRD)

Data constraints: Residency, PII, vendor policy decided?
Latency budget: P95/P99 targets documented? Region pinned?
Access model: RBAC, scopes, least privilege, service accounts set?
Observability: Central logs, metrics, trace IDs, alerting in place?
Quotas & rate limits: Per user/org/tool configured?
Secrets: KMS, rotation, break-glass documented?
HA & backups: Multi-AZ/DR plan? Tested restores?
Cost guardrails: Budgets, alerts, and off-switches defined?
Change management: Staging env, rollout plan, versioning?
Sunset path: How to migrate off the chosen option if needs change?

FAQs

Is "self-hosted" the same as "on-prem"?

Often, but not always. Self-hosted can run in your own cloud. On-prem means your physical network.

Can I start local and move to hosted later?

Yes—design tools stateless where possible and keep inputs/outputs typed so deployment changes don't affect clients.

What about cost predictability?

Self-hosted favors fixed cost; hosted favors variable cost that scales with use. Choose based on growth and budgeting culture.

How do I minimize hosted latency?

Run MCP in the same region as your data, enable caching, and batch high-chatter operations.

Key Takeaways

  • Security: Local for prototypes, self-hosted for compliance, hosted for collaboration
  • Latency: Local wins for tight loops, self-hosted for internal systems, hosted for global access
  • Cost: Local is "free" but limited, self-hosted is predictable, hosted scales with use
  • Teams: Local for solo work, self-hosted for stable teams, hosted for multi-team reuse
  • Hybrid patterns often provide the best of multiple worlds

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