Managing cloud expenses vs. on premise expenses

Advances in cloud development services enable businesses to provide easier, more secure and accessible payment solutions for their customers.  However, while considering moving to cloud storage as it seems the better solution especially these days, you should take into account the cost of both solutions – cloud vs. on premise. Let’s see the pros and cons of both solutions to be able to make a comparison and get the right business decision, accordingly.

1. Maintenance and Data Backup

   

In the short term, deploying on-premises setup requires a large upfront capital investment on hardware, installation, software licensing fees and data backup. When ready there are additional costs including an internal or external IT team for ongoing support, maintenance and security, as well as paying energy and hosting costs and for the extra office area necessary. Keeping data accessible and secure requires hardware that is compatible with other server systems. Therefore, there are ongoing hardware, software and licensing updates, upgrades and purchases fees required routinely.

However, with on-premises infrastructure, ongoing cloud service subscription fees are not necessary and internet bills may be lower since the local infrastructure may demand lower bandwidth for accessing files stored locally.

In comparison, the main advantages of cloud provider are that there are no high upfront costs, only monthly subscription fees required, the cloud provider takes over the maintenance, up-to-date software, computing compatibility, security and support costs. In addition, no IT team is necessary for troubleshooting problems or for general support and maintenance. Usually large amounts of storage are included in the base subscriptions. These terms can reduce operating costs significantly.

Moreover, with the cloud, predicting costs is easier comparing to the risk of overspending on updating or purchasing new hardware when choosing the on-premise option. Additional issue is data protection. Keeping storage on-premises involves a greater risk in terms of losing data following a disaster. To avoid such loss, companies usually have an off-site backup service which means more expenses. Data storage on the cloud is more reliable allowing for shorter recovery time which translates to lower expenses.

2. Security/threat protection

Cloud security issues are common reasons given by many IT professionals who prefer to stay on-premises. Are those concerns justified? When choosing on premises it seems that keeping data onsite is safer because it’s all under in-house control. However, it means that you are responsible for creating, maintaining and monitoring your own security system which require high level security expertise translating into costs.

Currently and moreover with the influence of Covid-19 pandemic, cloud security has improved significantly and using the cloud is safer than ever. According to Gartner estimates, public cloud service workloads will suffer at least 60% fewer security incidents than those in traditional data centers. Cloud providers deliver detailed full security services that include all you need in security terms like encryption for data in transit and at rest, network protection, application security, data redundancy, continual threat monitoring, mass file protection and more.

3. Compliance

Many financial and healthcare companies have to stay compliant with regulations such as HIPAA, GDPR or CCPA and many others. In the case of on-premise the company needs to have specialized knowledge and expertise in properly configuration and maintenance of the system and of course have the suitable dedicated employees for this task which can be costly. In addition, if you face an audit for being out of compliance, there is an added cost.

Using a compliant cloud provider can save much of the cost engaged for compliance issues. A cloud provider has experts who have compliance certifications in many industries saving you cost and some “headaches”.

4. Scalability

When a business got to the point of scale up, on–premises and cloud solutions have significant differences. Accounting, manufacturing, logistics, personnel etc. – all have to be able to handle increased demands.

If you work on-premise, adding resources like new hardware, software and upgraded memory bulk is required with all the cost it involves.

With cloud storage, scaling is easy. In the cloud, an organization is able to increase workloads in several simple actions (even clicks) using built-in features or adjusting a subscription with a cloud service vendor. This flexibility drastically cuts overhead costs associated with monitoring and scaling resources manually, in other words, you pay only for what you use.

5. Reliability and access from anywhere

For best service, accessing your servers needs to be quick and reliable to ensure a good user experience. On-premise does not rely on internet connection for onsite employees. But for those working from home it’s much more complicated. On-premises require robust redundancy that entails practically duplicating your physical infrastructure, which is costly to manage and maintain.

However, a good, fast, reliable internet connection is critical when using cloud storage. A connectivity problem can delay operations and reduce productivity. Therefore, having good internet connection is very important before switching to cloud storage. The cloud offers high availability and solutions for disaster recovery.

Following Covid-19 pandemic impact on the diversity of working location options it is obvious that the cloud has advantages over on-premises with respect to access capabilities of users working remotely. No need to go into details there…

To summarize, on premises system requires an initial extensive investment in hardware and infrastructure, ongoing costs of maintenance, storage space, power consumption and dedicated IT support.

However, although cloud computing requires an upfront financial investment, the cost savings of cloud computing in the long run are actually one of the top reasons many organizations consider making the switch in the first place.