Premise, Hosted or Hybrid? There's No One-Size-Fits-All
September 06, 2016
When it comes to deciding to take advantage of cloud-based business services, companies are often faced with a number of factors. They’ve seen other companies, both large and small, take their IT infrastructure off the premises and change to a hosted model. Other companies have sworn they get more out of keeping servers on-site. To decide, the average company needs to weigh cost considerations, how much control they want over IT resources, security, administration and a host of other factors.
There is no “one size fits all” model. Some companies are embarking on hybrid approaches, according to a recent white paper by call center management solutions provider Apropos. Some will keep key applications in-house and move the rest to the cloud. Others will decide IT is not a core competency and shift entirely to cloud services. A third option is to move IT infrastructure to the cloud while maintaining control over the application software. What’s important is that companies do a cost-benefit analysis and find the option that’s right for them.
The Primary Costs
When it comes to attaching hard numbers to the proposal to keep resources in-house or move to a hosted model, the most critical factors include:
The costs of hardware and software licensing. If the application is already installed and running, estimate when it will be necessary to upgrade software and replace hardware.
Space and utilities. Data centers require fairly extensive floor space, power and cooling, which can really spike the electric bill.
Backups and disaster recovery. Depending on your business, your needs for backup copies, redundant systems and remote sites may be urgent.
IT salaries. These are staff salaries to keep your IT resources up and running in-house.
Security. This includes firewalls, encryption, antivirus, spam filtering.
Support and maintenance contracts. Updates, patches and maintenance can add up to a significant amount each year.
The “Soft” Costs
Apropos also urges companies to consider the softer costs that may be harder to attach a price tag (News - Alert) to. If your premise-based system goes down and customers can’t get through, are you losing their goodwill? Are you driving them to competitors? Outsourcing can also leave the IT staff you do have free to spend their time on activities that help grow the business, like streamlining processes or developing new applications.
Once you’ve calculated the hard numbers and estimated the soft numbers, you can compare the cost of on-premises versus hosted.
“With your TCO estimate in hand, divide by the number of months and possibly users to make an easy, side-by-side comparison with hosted services,” according to the white paper. “Be sure to include onboarding fees with monthly hosting premiums for a fair comparison. Oftentimes one option will emerge as the clear winner. The cloud is growing in popularity because hosting providers can achieve economies of scale, service integration and high uptime that many IT departments are hard-pressed to duplicate at a reasonable cost.”
Some companies will find that taking a hybrid approach is what works best for them. They may, for example, outsource simpler, more straightforward applications and keep more complex applications that give them a competitive advantage in-house. There isn’t – and never will be – a single solution that’s perfect for every company.
Edited by Alicia Young
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