As you might remember, I recently wrote about how developers want us to move to the cloud. The issue, though, for each small or medium business is that the cost of hosted infrastructure is typically higher than the cost of a local server over a three-year period. Typically, the hosted solution also has a subset of the functionality of the local version, so careful comparisons must be made.
If you're looking at utility-scale solutions (such as the Microsoft BPOS solution) for your email and share point, you may find costs are advantageous due to the scale of the offering.
Keep in mind that I'm not referring to those more mature offerings; I'm talking about the hosted line of business applications that are industry specific and developed by smaller software houses. These companies have not yet moved their hosting platforms to the likes of Azure, and are currently hosting their own small-scale offerings in private data centres. These companies need to get a quick ROI on the investment they're made on infrastructure, and – quite frankly – they're nervous, as they've invested to write code that is cloud ready, and in infrastructure that has a limited shelf life.
So, the developers want to get a payback on the investment they've made, and fair enough too. Chances are that within a year or two, the big hosters will host the minor applications, and prices will come down significantly or the smaller providers will gain scalability and have cashflow to fund the continuous scaling up of their hosted offerings. If it not yet clear which way it will go, but it is clear prices will come down quickly as more people adopt the cloud solutions.
So, how do we decide today which solution to adopt?
The answer lies in functionality, TCO, complexity of your business topology and personal preference. If you have just one site for your business, cloud is not a huge benefit other than for your backup. Put in a local Small Business Server, and get on with your work. However, if you have multiple sites, there are more benefits in going cloud.
It is also important to consider the ongoing cost of maintaining your infrastructure of servers. Until you have a fixed price maintenance plan for your servers, it's very hard to compare the costs of maintenance of the cloud-based solution versus the local solution.
Some of the costs you need to compare are:
- License fees
- Hardware capital costs
- Hardware warranties
- Application administration
- Server administration
- Application support
- Server support
- Broadband fees
- Backup and recovery system costs
- Management of all of the above
Clearly, now is a time when investment should be made in analysis to determine the best path forward. In 12 to 24 months time, as the functionality of cloud-based solutions improves, bandwidth costs drop, infrastructure costs drop and more businesses adopt the cloud, the analysis will not be as important as the solution will be more obvious.
I realise I've not yet discussed security, sovereignty of data and other cloud-related issues around who owns the data and how well protected it is. So, there is clearly more to discuss. Of course, all of this is to be expected in the midst of a technology revolution.
David Markus is the founder of Combo - the IT services company that ensures IT is never an impediment to growth.
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