On-Premises servers vs. Cloud: Weighing the Costs

The cloud computing revolution is well underway, and countless businesses are already migrating to managed services or plan to soon. Although there’s undoubtedly a lot of hype surrounding the whole industry, there’s no denying the flexibility and scalability of the cloud. This is especially true in the case of smaller businesses with relatively limited funds available for investing in their IT infrastructures. However, the choice between cloud and on-premises isn’t always an easy one.

Maintenance and upgrades

On average, businesses tend to upgrade on-site hardware such as servers, workstations and networking equipment every four to six years. After all, in the fast-moving world of business IT, sticking to a dated infrastructure normally only ends up costing money in the long run. On the other hand, upgrades can be expensive, particularly if you’re heavily reliant on your in-house server for storing data and hosting everyday business applications.

Since on-premises systems require regular maintenance and upgrades, you’ll normally have to hire someone to look after the system or find a company that will take care of your IT consultancy and maintenance needs. Cloud-based services, by contrast, require much less on-premises hardware and, consequently, maintenance. In fact, all you need is a network of thin clients – barebones computers with monitors and input devices necessary for accessing your remotely hosted apps and storage.

Electricity and utility bills

Local servers are often kept on around the clock — since they usually need to run routine maintenance tasks such as backup jobs and security audits — during off-peak hours. According to the US Energy Information Administration, running a single server costs upwards of $730 per year. Added to the cost of running a typical business network with multiple terminals, workstations and other connected devices, the real annual costs quickly get a lot higher.

An on-premises data centre can also generate a lot of heat; hence the reason larger data centers need sophisticated cooling systems to keep them running optimally. Both these direct and indirect factors combined translate into high annual costs without even considering regular maintenance, upgrades and repairs. Cloud computing is the clear winner here, since it doesn’t require any power-hungry on-site resources or a large, dedicated space for storing a server system.

The likelihood of downtime events

As companies of all sizes become increasingly reliant on their IT infrastructures, downtime is becoming a major concern. After all, every hour your server is offline will end up costing your business money. If you’ve ever wanted to purchase something only to be told that the vendor’s systems are unavailable, there’s a good chance you gave up and started looking elsewhere. Of course, this is not a situation that any business wants to find itself in too often.

If you’re entirely reliant on in-house computing, downtime is likely to be a major problem during hardware, software or operating system upgrades, not to mention any potential “teething” pains that might follow. With the cloud, all such matters are taken care of, and a decent cloud-based service should be able to offer an uptime very close to 100%, since they’ll have redundant systems in place to eliminate downtime when upgrading their own servers.

Bandwidth requirements and consumption

Although cloud computing just makes sense on many levels, at least in the case of SMBs, it does also have its inherent drawbacks. Most significantly, migrating to the cloud introduces the problem of heightened bandwidth requirements. Even if your managed services vendor offers the best and most reliable service possible, it’s still heavily reliant on the service provided by your ISP. An unreliable connection or bandwidth limitations will quickly render the service useless.

On-premises systems are limited only by the internal infrastructure of your company. As such, they’re inherently more reliable in regions where Internet connectivity might be problematic. Fortunately, Internet availability and connectivity is improving by the minute, particularly in areas where businesses are likely to have their offices. Many cloud-based services also provide their own innovative ways to handle bandwidth-related issues, such as caching commonly accessed data on local machines.

While there’s still a case for on-premises computing in certain situations, the scalability and flexibility of the cloud makes it by far the most practical option for SMBs with limited resources. We provide a wide range of tailored services to accommodate businesses of any sizes. Call us today to learn more.