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VOL. 128 | NO. 148 | Wednesday, July 31, 2013

Buy a Server or Move to the Cloud?


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Patrick Tamburrino

After a few rough years with the economy, and after squeezing every last drop of functionality out of their existing infrastructure, some companies are faced with the question of replacing that infrastructure with new equipment or moving their information to the cloud.

While the option of putting data in the cloud is attractive especially to new companies that do not have established server infrastructure, the financial aspects surrounding a move to cloud computing for established companies may surprise you.

According to a recent article in Forbes, when established companies received proposals from leading cloud computing companies and peeled back the onion a bit, moving to cloud-based servers was far more expensive than simply investing in new server infrastructure.

In investigating the costs of moving to a cloud-based server, the “blended cost” of a server that can handle complex applications as well as file storage, and the related support, licensing and necessary infrastructure features can cost approximately $100 per month per user. If a company has 10 users, that cloud-based server cost is $12,000 per year. If you analyze your costs over a three-year period, that cost is $36,000.

By comparison, a good server for a user base of that size costs approximately $7000, including licensing. Implementation or migration costs vary, but a good rule of thumb is about $4000. Support costs for the server itself average about $3,000 to $4,000 per year. Over that same three-year period, the cost of a new server with implementation and support is approximately $23,000. Most servers will be usable for far longer than three years, especially if properly maintained.

Although this example paints a rather stark picture of its costs, a company should not avoid the exploration of cloud computing altogether. It is a trend that will most certainly continue, and as more companies invest in cloud-based computing resources, its costs will go down. If a company wants to take advantage of some of the benefits of cloud computing but it’s not ready to spend the sort of money it takes to plunge in altogether, it is possible to take advantage of some less-expensive cloud-based products.

Consider integrating systems such as Google Apps or Dropbox for Teams. These services have a large enough user base that their costs are relatively low, and to use them, a mass transfer of information is not necessary. Equally important is that in most cases these systems can work harmoniously with a company’s existing systems.

While cloud computing services can offer some significant savings for new companies that have no existing server infrastructure, it often costs more money for established companies to make the move. When considering moving to the cloud, choose your options carefully.

Patrick Tamburrino is the president and technostrategist of tamburrino inc., an IT strategy, support and management company in Memphis. He can be reached at patrick@tamburrino.com, 489-8408 or www.tamburrino.com.

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