Simplifying the Cloud: 5 Reasons Why Small-and-Medium Businesses Should Think Twice Before Purchasing Another Server

Cloud computing has been around for some years now. Initially, it was somewhat of a “foggy” concept used to describe the move from on-premise to off-premise technology. But as cloud computing has become more prominent, people have begun to see it as a service delivery model. More businesses—both large and small—are now choosing to embrace the cloud, eager to stretch their IT budgets and maximize return on investment.

Yet many small-and-medium businesses (SMB's) struggle to decide on cloud servers versus in-house servers. Which is the best solution? Which costs less—short-term and long-term? Which is the most secure? To help SMB's answer these questions, here’s a breakdown of the pros and cons for each option.

On-premise servers used to be the only choice available for storing data, sharing files and running business applications. If your servers are just down the hall, you have more control. You can upgrade them to meet your company’s requirements, and you don’t have to rely on anyone else for security. On the other hand, running an in-house server can be expensive. You pay a lot upfront to buy equipment and software, and then face the recurring expenses of software licenses renewals and hardware upgrades. Also, you will likely have to hire a professional to install and maintain the servers.

A cloud server is a great solution for businesses that have many virtual workers or workload variations. If you opt for a cloud-based server, you don’t have to manage it or pay professionals to maintain it. A cloud server also allows you to scale up or down to meet your business needs. The potential downside is that you have monthly hosting fees, and you are dependent upon your network connection. No matter how efficient your cloud servers may be, if you lose connectivity, you lose access to your data. The risk of losing your network can be mitigated with a good design and built-in redundancy. 

1. Cost

What does your current infrastructure look like? In some cases, it may be cheaper to switch to cloud computing than to start the whole process of buying in-house servers and dealing with the configuration, installation, and maintenance. Do your servers meet your current needs or have you fallen into the trap of buying machines with extra capacity in case you might need it one day? If you opt for cloud-based servers and virtual machines, you only pay for what you use when you use it, and you can always modify your required capacity later. Also, software licenses are often factored into the price of cloud services.

2. Tax Benefits

Purchasing new servers and other hardware is considered a capital expenditure, meaning the cost of the asset depreciates over the years. Cloud provider costs are considered operational expenses because you are subscribing to a service, so you can deduct cloud expenses in the same year. This translates to a big tax savings for many businesses.

3. Reliability

Machines break, and servers are no different. You should be able to depend on your servers and their redundancy to run your applications and workloads. If one of your cloud servers fails, it’s easy to switch to a new one and continue operations. Downtime is minimal and the added cost to get your business back up and running is low. On the other hand, setting up a redundant system and software for an on-premises server can be expensive. Either you have a duplicate server running somewhere else or you have to move fast to repair the one you have so you can get your website or application up and running.

Whether you choose in-house or cloud, a good disaster recovery plan will help you save both time and money. Most cloud service providers include ‘disaster recovery’ services as part of their portfolio since recoverability is often built into their design with sufficient file backups, redundant network routes, redundant power supplies, and more. You can also set up mirrored virtual machines or other recovery options in your cloud environment for immediate failover without buying more hardware.

4. Security

Security is a critical element to any business, not only for their own internal data, but also as custodian of their clients’ data. Unless your business has an army of security specialists, chances are that a cloud service provider has more and better security expertise, staff, and tools. While no one can fully prevent a security breach, a cloud service provider can actually improve your chances of combatting security threats.

5. Performance

Resources on a cloud server can be scaled up or down to suit your changing business needs. This kind of flexibility allows you to add or remove RAM, CPU, and hard drive space as you need it. When you’re using an on-premises server, your ability to scale resources depends largely on the physical hardware. If you want to add more resources to your business applications, you’ll need more hardware. You may also need load balancers, routers, switches, network configuration, server configuration, etc. This is a complex undertaking, which can be both costly and time consuming.

Hybrid Solution

It can be difficult to move everything wholesale to the cloud because of the complexity of today’s environments. The hybrid cloud—a mix of on-and off-premises—offers the best of both worlds: a combination of strengths allowing organizations to achieve the performance of on-premises solutions yet also the management convenience of the cloud business model. For example, because it’s so easy to scale resources on a cloud server, some businesses prefer to use both, opting for in-house resources for regular workloads and switching to the cloud during peak periods or for development and testing.  

Still skeptical? Learn more about the benefits of cloud computing by clicking below:

• “8 Ways to Measure Cloud ROI” from CIO Magazine
• “How Cloud Computing Works” from How Stuff Works Tech
• Cloud Computing Solutions from C Spire