"The Cloud" is one of the most common yet least understood technologies in today's business…
The first thing that comes to mind when considering moving your in-house systems off premise might be “how much is this going to cost me?” But an even better questions would be, “how much am I going to save?”
The answer? A lot. See why.
The Hidden Costs of On Premise Solutions
The ability to save money while getting even more capabilities is a huge motivator for companies moving to the cloud. In fact, according to a study by Aberdeen Group, the two main pressures ushering companies towards cloud computing are both based in financial savings.
A lot of these savings come from unexpected places. That’s because on premise solutions come with many hidden, too-often-forgotten costs. Few companies know their true total cost of ownership (TCO), which goes way beyond the initial hardware and software investment. In fact, the savings from your electric bill alone could put a huge dent in cloud hosting fees.
In-house costs include:
- Hardware replacements
- Electric bills for running servers
- Renewed licensing and software costs
- Fighting skills depletion for legacy systems
- Having a team available to maintain and manage your systems
- Downtime costs (cloud solutions are known to have more uptime)
The Savings Off Premise
According to Teena Hammond of ZDNet, companies pay about $1,000 a year on average for electricity, per server – and that’s not including general upkeep or maintenance. That’s because stable, available systems take extra components (like multiple processors, power supplies, hard drives, RAID arrays, cooling units, and more) that eat up extra energy. Of course, this number only multiplies for companies running more than one server.
IT Specialist Derrick Wlodarz writes that cloud servers need less than half the maintenance that physical servers do, while providing unparalleled uptime. Considering he also states that the cost of downtime averages around $4,000/hour for smaller companies, and $72,000/hour for large enterprises, these savings can’t be overlooked. Since cloud solutions are notorious for having unbeatable uptime, these costs are invariably minimized with off premise cloud solutions.
More savings come from no longer needing to invest in hardware replacements. On premise systems should be replaced about every 5 years (unless you want to risk a disaster and data loss from hardware failure). Replacing your systems is something that most companies don’t truly consider when factoring in average costs of on premise systems. Sure, the monthly costs might be low, but there will be a reliable (and serious) spike in expenditure around the 5-year mark, between the cost of new hardware and licensing.
The above savings listed from electricity, downtime, and new hardware purchases are easier to quantify. Other, more elusive costs include having the staff to monitor and maintain your systems, or needing to pay for resources you’re not always using. With off premise cloud computing, these costs are diminished as well. Companies benefit from monitoring and management from the cloud provider, and also save money by only paying for the resources they need, when they need them. These are particularly significant benefits for small and medium-sized businesses (SMBs), since with cloud computing they can utilize enterprise-class resources on smaller budgets.
To find out more about how off premise cloud computing will save you money, contact us today at 317-707-3941.