The True Costs of On-Premises vs Cloud Computing

Cloud, Computing, Data, Cloud Computing, Dropbox, GoogleDrive, Hardware, Software

If you thought it was before, you have probably since realized that The Cloud is not a fad and is here to stay.

Below, please find a blog posting from a referral partner of L6S Business Consulting, Josh Szakal of Black River Technologies.

If you thought it was before, you have probably since realized that The Cloud is not a fad and is here to stay. The Cloud is everywhere, and you are likely using it as a part of your everyday life, whether you know it or not. For example, do you do any online banking, download music from iTunes, or use GoogleDrive or DropBox for file storage? That’s right, these are all cloud solutions! Now think about what you pay for these services – the price is very affordable, if not free!

The same is true for cloud accounting solutions, just on a different scale. My organization jumped on The Cloud bandwagon almost two years ago. I was initially surprised at how high the annual subscription costs of our new cloud solution were compared to the cost of the legacy on-premises solution we have been providing for the past 30 years. What I neglected to realized was that cloud software subscription pricing is ‘all-in’, whereas on-premises software always contains additional costs that need to be factored in to the total cost of ownership.

I love the below infographic as it provides a really good comparison of On-Premises vs Cloud Computing. It is plain to see at the tip of the icebergs that Software Licensing for On-Premises software is far less that the subscription fees for Cloud Computing, but below the water line are the additional costs that many (including myself initially) sometimes fail to factor in when looking at the total cost of the solution. Yes, the software licencing for On-Premises is only 9% vs 68% for Cloud, but implementation costs are generally higher (mainly due to the fact that software needs to be installed on both a server and client workstations, hotfixes & updates applied etc.).

In addition, you also need to factor in your hardware costs, as well as the associated costs to maintain that hardware either by in-house or contracted individuals. On the topic of hardware, it’s also important to remember in that in today’s day, servers usually need to be replaced every 5 – 7 years, which is something you don’t need to worry about in The Cloud.

So far all I’ve touched on are the hard cost comparisons between On-Premises and The Cloud, but we should also remember that there are indirect costs involved as well. For example, downtime. Most Cloud Software Vendors boast a 99.99% uptime. Can you guarantee that same percentage with On-Premises software? Likely not. What if you server goes down? How long will it take to bring a technician in to bring it back up? What will that cost be? What is the cost of yours and your staff’s time when you can’t be working in the software?

What about disaster recovery i.e. loss of data due to a natural disaster? With the cloud solution that we offer, in the event of a major natural disaster, downtime will only be a few hours, and it is guaranteed that you would only lose 2 hours of data, at the absolute most. Can this be guaranteed with on-premises software? Is your data hurricane-proof?

This type of cost analysis is something the team at Black River Technologies does on a regular basis. We use tools that are published by Nucleus Research, and are always happy to do a Total Cost of Ownership (TCO) analysis for anyone looking for their true costs.

Interested in a TCO analysis for your business? Just drop us a line here and we’d be happy to plug your numbers into our analysis tools.

GoogleDrive, Dropbox, Cloud Computing, On-Premises Computing, Data, Data Safety, Data Integrity

There are 6 types of costs for On-Premises computing while only 2 charges for Cloud computing.

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