Hosted RAG is fast to start and someone else's to run. For a regulated enterprise, the trade you're really making is control. Here's the case for keeping it.
JP
Jürgen PietschmannAI Consultant
Published12 June 2026Updated25 June 2026Read3 minSovereignty
A hosted RAG service is the path of least resistance: sign up, point it at your documents, ship a chatbot by Friday. For many teams that is the right call. For a regulated, German-speaking enterprise, it is worth being clear-eyed about what you are trading away.
Where the data stops
Self-hosting is a boundary, not a setting. Once the stores and the model sit inside your network, the three guarantees stop being clauses you have to trust and become things you can check at the network layer.
What “self-hosted” actually buys you
Three guarantees you can verify
No data egress. Documents, vectors and metadata live in your own PostgreSQL, Redis and vector store. With local models via Ollama, nothing leaves your network — verifiable at the network layer, not just in a contract.
No new sub-processor. Self-hosting means there is no RAGSuite processor to assess. Your personal data stays inside your existing controllership — the cleanest path to DSGVO Art. 5, 25 and 32.
No phone-home. No telemetry, no usage beacon, no remote kill-switch. Enterprise unlocks with a signed, offline licence key — so an air-gapped instance simply works.
The cost shape is different too
Open core means no lock-in
The RAGSuite core is Apache 2.0. That is not a synonym for “free” — it means inspectable and portable. You can read the code, export your data, and leave. Open core is insurance against the day a vendor’s incentives stop matching yours.
If you are a small team without regulated data, a hosted service is often the pragmatic choice, and standing up infrastructure is overhead you do not need. The calculus changes when data residency, audit, and the ability to prove control become first-order — which, in DACH enterprises, they usually are.
Isn't open source just 'free'?
No. Apache 2.0 means inspectable and portable. You can read the code, export your data, and leave — insurance against the day a vendor's incentives stop matching yours. 'Free' is the wrong frame; 'no lock-in' is the point.
