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The Cost of On-Site vs Cloud Computing – Which One is Right for You?

The benefits of cloud computing are many, and if you haven’t already, you’ve probably considered moving your business to the Cloud. In many cases, it is more secure, offers more flexibility, and the ability to scale as needed more quickly and efficiently. And many companies move to the Cloud because of cost savings. The question is, what is the difference in cost and is it worth it?

Cloud Computing Fees vs. Upfront Hardware Costs

Cloud costs are naturally determined by the vendor providing your Cloud services. Factors they consider when setting their price structure include storage services, computing, and networking costs. Just as you would calculate the costs of your onsite computing needs, the vendor you choose calculates these costs and distributes them across their client base. The costs associated with storage hardware, including the need to provide new hardware as needed, CPU requirements, licensing fees, and costs associated with maintaining the network, including maintenance and labor costs are all factored into the monthly fee they charge their customers. There are no hardware costs upfront and no costs associated with licensing fees for the customer. Your provider assumes those costs as part of their service.

Payment structures vary for the largest Cloud services providers, including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. All three offer some form of pay-as-you-go, with various tiers so that you can structure your service according to your needs.  Finding the provider that best fits your organization’s needs is key to keeping the costs of Cloud services down.

Conversely, traditional IT infrastructure onsite bears consideration for your organization as well. The cost of buying the hardware, the associated licensing and storage, and the backup equipment needed is the capital costs involved with an onsite infrastructure. Next, consider the costs associated with operating these systems, including labor, energy needs, training the IT workforce, etc. And it’s important to also factor in the indirect costs associated with downtime, whether planned or unplanned. Those indirect costs can be hard to quantify, but they inevitably happen, and it is wise to factor in an estimate of the associated costs when they do.

More About Hardware

Since Cloud computing does not require that initial hardware investment for backup servers and necessary storage, it follows that there’s no need to factor in replacement costs for that equipment either. Keeping up with technology advances and server upgrades will be managed by your provider. When needed, new hardware will provide more performance power, faster processing, and more security for your data.  And having someone else monitor when new hardware is needed takes the stress off managing those IT needs inhouse.

Only Pay for What You Need, When You Need It

With Cloud computing, you pay for the services you need, when you need them. Your business may have seasonal fluctuations that require more server bandwidth at certain times of the year. An in-house technology platform may not always be able to accommodate those fluctuations. The result may be having to invest in more hardware to fill the need. With Cloud computing, the extra services are there when you need them, and when you don’t, you aren’t paying for something you aren’t using.

Maintaining and Powering Equipment

As noted earlier, getting a realistic view of the full cost of maintaining your IT inhouse can be complicated. Server maintenance costs are one part of the puzzle, but the list grows long when considering the energy costs associated with powering the hardware, and the staff needed to do the work. Factor in the hiring process and training associated with it, and the costs associated with downtime when something goes wrong or there’s staffing turnover. Although your Cloud provider will not necessarily replace your IT department, depending on your organization’s size, it will free up your technology team to focus on your business’s specific technology needs, vs. the basics of maintaining the platform.

Disadvantages of Cloud Computing

Although Cloud computing offers many advantages, as we have just discussed, there are disadvantages that should be considered when making the best IT services choice for your organization. Downtime is probably the biggest concern with Cloud computing. Internet service interruptions and outages are a fact of life and can occur anytime. An outage can cause critical downtime and data loss for your company, and it is important to know your options for disaster recovery and dedicated connectivity with the Cloud service provider you choose.

Security is of course of utmost importance for any business, big or small. And privacy is equally important. Your Cloud service provider is responsible for the security and privacy of their services to you. The good news is because security and privacy breaches have escalated over the past few years, much work has been done to tighten security and protect privacy more effectively. That being said, it is ultimately your responsibility to protect your business. It is best to understand the shared responsibility model of your cloud provider. Implementing other security measures like multi-factor authentication, encryption, and limiting access to only necessary personnel are your responsibility and will help protect your organization.

Although monthly costs associated with Cloud computing eliminate the need for large upfront equipment costs, they can still be pricey. Make sure you can scale your services down as well as scale up as your needs change, and find out about other cost-saving measures offered if you know you have consistent minimum usage.

Final Thoughts

When weighing the many choices for your organization’s technology structure, keeping in mind your company’s size, the need based on your business demands (high-tech vs. basic and user-friendly), and the affordability, do your research and consult with experts. Consider getting in touch with us to help you determine exactly what you need and what you can afford. At California Computer Options our expert team will partner with you to choose the right technology platform for your business.  Contact us today!