Organizations are typically replacing on-premise equipment every 5 years. This is a hidden cost that is not often considered in these decisions...

Cloud vs. On-Premise: Which Is Right for Me?

Date: August 15th, 2014
Author: Justin Rice
Tags: cloud, phone, smb, security, IT, compliance, premise-based

“Should I move my business to the cloud?” is a question many business owners, executives and staff are asking themselves in today’s age. The truth is there are many advantages to doing so, but it may not be the right choice for every business. There isn’t a right or wrong answer, but I am here to provide you information needed to make an informed decision. 

First, let’s talk about the benefits of moving your business to the cloud. With cloud services, you will have lower capital expenses than you would if you were investing in new on-premise infrastructure. You are not purchasing hardware, which often times can cost hundreds of thousands of dollars up-front. Typically, cloud services operate on a “pay-per-use” model, and are very scalable up or down, which is great for companies with fast growth, or even companies that decide to reduce their footprint. Your potential for downtime with cloud services is significantly reduced because equipment is typically hosted in a telco-grade co-location or data center with significant power backup and redundant network connections. With cloud services, you also have the benefit of your provider doing data backups for you.  

In addition, businesses (especially SMBs), may also want to invest in cloud services if they have the lack of technical resources on-site to build or maintain the technical infrastructure. Moving businesses to the cloud puts the responsibility on the service provider to make sure systems are updated with proper security patches and software updates, allowing your internal staff to focus on one thing: your core business. 

Moving your business to the cloud may seem very attractive, but the decision should go far beyond costs. If you are an organization that has strict compliance regulations, keep in mind that third-parties will now be in control of your confidential data. If you are an organization that handles credit card information, it is important to ensure that the cloud provider is compliant with all PCI standards. If you have complex systems, like a home-grown billing system for example, integration with a cloud based provider could prove to be costly and time consuming. If you are a business that relies on a 99.99% uptime, it’s important to calculate your downtime cost per hour when evaluating your decision. 

Moving your business to the cloud may not be the right decision for your business, and an on-premise infrastructure may be more beneficial. For example, if you have large capacity file shares, or operations that use significant bandwidth, on-premise infrastructure may be a better solution. Businesses that do not have sufficient bandwidth to the Internet to support cloud services will either need to upgrade bandwidth or keep services on-site.  

Finally, when considering moving your business to the cloud or keeping it on-premise, keep in mind the “5 year rule”.  Organizations are typically replacing on-premise equipment every 5 years. This is a hidden cost that is not often considered in these decisions because it is not an immediate concern. Looking at Total Cost of Ownership is a better way to evaluate this decision, as it will include upgrade costs, recurring monthly costs, CAPEX costs, and puts it all into perspective. 

To wrap it up, there isn’t a right or wrong decision. Whatever you decide, it’s most important to make an informed decision on what is right for you business today and moving forward into the future.