Keytel Systems Blog
Cloud or On-Site Computing? Costs and Benefits
When opening a business that will have significant technological investment, one of the first questions a business owner will need to determine is, will this business require on-premise computing or cloud-based computing? The answer boils down to several factors, including which team members need to access which data, as well the type of protection required for sensitive proprietary data. You have to figure out how many users have access to data, as well as whether you can afford the physical hardware required to keep your computing operations in-house.
As with physical inventory or human resources, there are costs associated with acquiring and utilizing technology. For new companies, it's important to set the tone early by investing in tools that set the course for operational success.
There are several technological investments that often need to make upfront:
- Data storage and backups
- Email platform
- Voice over Internet Protocol (VoIP)
- Operations software
- Productivity suites
- Cyber Security
It's not difficult to calculate the upfront costs of hardware. However, it can be a bit difficult to compute the total cost of data or ongoing systems maintenance. This blog will help to uncover those costs, along with benefits of keeping it in house or in the cloud.
The most important issue that concerns establishing an on-premise computing platform is the high cost of installing all the physical hardware. On-premise computing requires a larger capital investment in equipment and set up. To seamlessly integrate every application, you can expect to spend a considerable amount of money upfront. This includes assigning team members or an outsourced company set up and then maintain systems.
On the flip side, there are several benefits for operating an in-house computing system. Number one is control. With on-premise computing, you have complete control over every business application, as well as full control on how you utilize different hardware components. You will have instant access to critical data, without having to rely on an internet connection.
You will have to play the costs and benefits game when it comes to deciding whether on-premise computing meets the objectives of your company. Take into consideration fixed, variable, and ongoing operational costs, and then compare the benefits of having full control of your company’s computing system.
For a new business that does not have to deal with highly restrictive compliance mandates, going with a cloud computing service is the way to go. You can expect a lower amount of setup costs that can help you divert valuable financial resources to other departments. Cloud computing also allows you to use one service to meet all your company’s computing requirements.
For business that has been around a while and currently manages their computing in-house, they need to weigh the cost benefits of opting for cloud computing to the disadvantage of losing control over your computing infrastructure. For example:
Uptime and its Relationship to Reliability - The most important benefit cloud computing providers like to promote concerns uptime. While the uptime for cloud providers is typically very good, if it goes down, it might be at a crucial time for your business operations. Now, in-house systems can also go down, but it all comes back to control. It's under your control to get your in-house systems back up and running. With cloud computing, you're at the mercy of the cloud provider.
Speaking of Problems Predicting Costs - It might appear to be an easy thing to estimate the cost of cloud computing, but as we just mentioned, you cannot accurately estimate the cost of downtimes until days or weeks after every downtime incident. You also have to extrapolate the cloud cents per service costing model over months and years to develop an accurate number to put in the business operating budget. To save money, your business can transfer the least accessed business applications first from an on-premise system, before slowly moving to a complete cloud computing model.
What’s Security Like in a Cloud? - Just how secure is cloud computing, anyway? You might read online accounts about how different businesses suffered security breaches while operating on the cloud. The fact remains you have to pay special attention to the security measures implemented by a cloud computing provider. A good idea involves hiring an independent company to run a test to determine whether your cloud computing program secures data and business applications. The cost of losing proprietary data can be expensive.
Cost of a Transition to Cloud Computing - In order to fully transition from an on-premise computing system to cloud computing, your business will have to go through extensive testing for compatibilities, as well as large data transffers. The business may experience downtime during the transition. If there are several incompatibilities that were not considered before a cloud computing transition, then it may take more time than initially anticipated. We typically only recommend moving from on-site to cloud if the on-site infrastructure is significantly aged and beyond its useful life.
Best of Both Worlds: Cloud and On-Premise
Advances in technology allow businesses to operate on the hybrid cloud computing model. The reason for considering a hybrid solution is the increase in data regulations that make using a single computing model cost prohibitive. An on-premise computing system churns out frequently required data, while moving less frequently used to data to the cloud platform. Cloud storage service plans typically are less expensive than the storage developed for proprietary in-house servers. However, creating a highly functional hybrid cloud computing systems requires you to understand two potential drawbacks.
Uncertain Use - Over planning for the cloud portion of a hybrid system will produce a substantial increase in computing costs because your business gets charged for using computing resources it never uses.
Costly Development - Building a hybrid system at first creates plenty of development costs because of the difficulty of seamlessly blending the two different technology platforms. Development costs vary among businesses, which means your business should ask for an upfront cost estimate, before deciding whether to go with a hybrid cloud computing system.
Do not give up on the hybrid idea just because it can be a difficult process to complete. At Keytel Systems, we have helped business in many different sectors design, support, implement, and administer highly effective and cost friendly hybrid cloud computing systems. To understand what cloud computing can mean for your business, contact us today for a no-obligation phone consultation or by emailing us.