On-premise Servers vs. Cloud. What’s best for your business?

June 10th, 2016

There are no universally accepted solutions in the world of IT. Mac vs. PC, Office 365 vs. Google Apps, PBX Phone Systems vs. VoIP, or On-Premise Servers vs. Cloud, are just a handful of the choices business owners must make. Each one has its pros and cons so it is up to you to understand these differences and pick the solution that aligns with your company’s strategies and goals. Unfortunately marketing hype can con-volute these decisions and cajole you into purchasing technology you don’t need.

A good example of this is the Apple craze of the mid to late 2000s. How many business owners wanted their company's fitted with Mac computers and iPhones simply because it looked cool? Quite a few if we’re being honest. Now this isn’t meant as a slight to Apple products which can be the right answer for an organization if used correctly, but choosing an IT solution based on marketing efforts or the “coolness” factor isn’t exactly the best way to go about things.

While not quite at the level of Apple, cloud service providers have been inundating small and medium-sized business owners with examples of how utilizing this technology will help them reduce costs and help improve productivity. And in most cases these claims are factually accurate but don’t necessarily reveal the big picture when it comes to using cloud-based servers.

The benefits are real, but your company will also be faced with several challenges that are sometimes glossed over by cloud server providers. Some businesses can succeed by storing data in the cloud but for others using on-premise servers makes far more sense. Here are four questions that need to be considered before making a decision on servers.

Does your data need to be compliant?

Companies in the healthcare industry are probably all too familiar with HIPAA regulations that dictate how their data must be secured. The same goes for banks, law firms and even retail businesses that all have very specific guidelines on how data must be protected. However, there is no such thing as a HIPAA-certified cloud service provider and while they may claim to have the processes in place to ensure data compliance, the reality is you will be responsible if they fail to do this.
For some businesses, especially those with complex or demanding regulations, using on-site servers can simplify the security process. It also allows you to take on this risk yourself. Cloud service providers try to do their best to protect your data, but at the end of the day they still have multiple clients to worry about and will likely carry on even if your security is breached. The same cannot be said about you, however.

How is your internet bandwidth?

One of the biggest benefits of using on-premise servers to host your information is that you always know everything is readily available for you. When you use cloud-based servers your employees will become dependent upon the internet for access to files and applications. This isn’t an issue for those companies in metropolitan areas with business-class, high speed internet connections. But for those in rural areas or using consumer-grade internet connections, using cloud-based servers might not be as helpful as advertised.

So how can you determine if your bandwidth is capable of handling the cloud? Well, if employees regularly complain about how slow the internet is at your office, you’re probably not ready. Even if things move crisply, the extra strain the cloud causes could slow things down. Ars Technica estimates that 100 kilobits per second per user is good enough to handle web-delivered cloud services such as mail, collaboration and CRM but this figure can vary. If you do need to upgrade your internet bandwidth, you are going to want to factor this into the overall costs of moving to the cloud before making your decision.

Do you need your custom apps?

Not all applications can be hosted on cloud-based servers and this is especially true with legacy applications or those that have on-premise licences. If your business uses a custom application for an operating system that is not supported by cloud service providers, it will not work. Even if the OS is supported, there are no guarantees that it will function correctly in the cloud.
By utilizing on-premise servers you will be able to continue using all your custom applications. This can be important for those companies who developed their own supply chain management or business process automation applications and don’t want to invest the time and money required to pivot away from these. If your business will be disrupted by an inability to access or use these applications, moving to the cloud might not be the right fit for you.

What are the true costs?

When it comes to using cloud-based servers, the biggest attraction is the proposed cost savings. Instead of spending a lot of money on a one-time investment for servers plus the monthly cost of powering them and keeping them cool, you can pay per user per month. Depending on the needs of your business this can range from $5 to $50 and as the price increases so too does the storage space and available features.

In the short-term going with the cloud seems cheaper, but chances are you plan on being in business for the long run. This is where cost comparisons get a lot more competitive. Servers tend to last roughly five years before needing to be replaced. Entry-level, small-business grade servers can be found for about $1000 and with those featuring more storage space and CPU obviously costing more. When you start thinking about how much this averages out on a monthly basis over the course of five years, the difference in cost between the two solutions isn’t as great as it is made out to be.

Another thing to note about on-premise servers is that once you buy them, you know there aren’t going to be any price hikes down the road. When it comes to cloud-based servers, the price you pay today may not be what you pay six months from now since you are at the mercy of your provider.

Choosing between on-premise servers and the cloud is a big decision and one you don’t want to make based on buzz or marketing speak. The key is finding the right fit for your organization. If security is important or you need custom applications to maintain your operations, the cloud might not be the best option for your business. Whatever you do, take the time to understand the issue thoroughly and factor in what the true costs, not just the initial ones, will be.

Don’t feel as if you have to make this decision on your own. The experts at Constant C have a wealth of industry specific knowledge when it comes to finding server solutions. We can analyze your current setup and future needs to find the right fit for your company. Whether thats a cloud solution, or an on premise one. Give us a call today at (204) 272-1458, because tomorrow is too late.