Should My Business Buy a New Server or Switch to the Cloud?

You are an IT executive or a financial decision maker for your company and you’ve just been made aware of your company’s IT hardware is beginning to fail or causes regular interruptions to your company’s associates. You’ve heard the complaints for a while but business IT purchase decisions are complicated and costly so you want to make sure your company’s money is well spent.

Or maybe you are reading this because you are opening a new business or location and deciding for the first time which option – purchasing a new server and hardware or setting your company up on the cloud – is the best decision.

This question is commonly debated among all size companies because IT hardware has a finite life and keeping pace with technological changes is always a challenge for businesses.  At mpsWORKS we get asked this question all the time, “Should we buy a new server or switch our company to a cloud-based networking environment?”

Can I fix my current server?

Every business would prefer to save its valuable cash for more exciting purchases or opportunities so it’s not a bad business decision to try to spend less and fix an old server.  As servers age, though, they become harder to maintain. Replacement parts are difficult to find and the speed and processing power of an old server may not keep pace with your business needs and can begin to affect your company’s productivity.

Old servers are costly to maintain. Whether the cost is in the loss of productivity or the hourly cost of your IT employees or IT service contractors, the repair costs begin to add up. Downtime also can plague the company that tries to utilize a server that is effectively on its last useful days. Downtime can be a dramatic drain on your customer-facing business as well as halt all productivity of your employees.

Waiting to replace an old server subjects your company to risks that may ultimately cost you more. Old servers sometimes have unsupported software programs that can crash your server.  Attempting to fix an old server during a catastrophic event could leave your company susceptible to longer downtime. Fixing an old server is sometimes like fixing problems on an old car – sometimes the cost to continually repair is not worth it.

What problems am I trying to solve?

Each company is unique in its needs and budget but every company is looking for a solution that maximizes uptime and performance while providing it at a fair price. Your first step in deciding which option is best is to identify important factors particular to your business that require technology solutions. One example may be whether your company is seeking easier access to the company’s data and applications from remote or at-home computers? 

Take some time to complete the following checklist before reviewing the pros and cons of an in-house server versus the cloud:

COMPANY NEED	CHECK, IF APPLICABLE
Will the new server support multiple offices?
Do employees working collaboratively with remote colleagues?
Does the company’s workforce need mobile access to data and company applications?
Is the growth of company uncertain and estimating the necessary size of data storage going to be difficult?
Does the company have in-house IT staff for managing the server or will it outsource server maintenance?
Do the employee numbers fluctuate based on seasonal factors or market opportunities?
Is fast processing and retrieval of data critical to business operations?
Does my company have a suitable location to store a server on-site with access control and sufficient cooling?
Can my business be offline for more than 3 hours in the case of a catastrophic server failure?
Does the company have the cash available to purchase expensive hardware?
Will the diversion of cash for IT hardware negatively affect the investment in other money-making opportunities?
Would the business prefer less upfront cost in return for predictable monthly payments that make budgeting easier?

Consider your answers from the checklist when learning about the pros & cons of a cloud server.

Pros of Implementing the Cloud

• Saves company large cash expenditure to replace expensive hardware when replacing a server or multiple workstations.
• Data storage is added as your company grows so you are only paying for what you need.
• Backup and restore functions are simple and quick in the cloud due to backup imaging of data in multiple locations.
• Data in the cloud is backed up as regularly as 15-minute intervals.
• Thin client workstations (internet accessible terminals without hard drives) are all that is needed for employee access to the cloud. Thin clients are simple to set up and inexpensive to purchase.
• Cloud access is easy from any mobile or remote device with an internet connection.
• Software applications are installed on server and access given to individual users. This eliminates individual installations of software which provides cost savings and improves workstation security.

Cons of Implementing the Cloud

• The monthly cost of utilizing the cloud may not be needed for companies that are less dependent on continuous uptime and data storage flexibility and security.
• Data storage needs usually increase with time so the company will want to limit excessive storage of files due to employee work habits (e.g. saving multiple copies of data-heavy files like PowerPoint)
• The company requires a dependable internet service to access files.
• Brief interruptions of internet service, such as a 20-30 second outage, can interrupt a cloud user in the middle of working.
• Thin clients cannot have software applications installed locally so will always need cloud access for business-related applications.
• Unique business risks may require additional security protocols to protect access to the business network such as Multi-factor authentication.
• Software applications with heavy bandwidth requirements do not always perform well in a cloud-based environment.

The Cloud is Recommended for the Following Types of Companies

• Businesses are migrating to the cloud because it provides additional flexibility and cost stabilization. The following are characteristics of companies that we believe would greatly benefit from a cloud-based IT environment:
• Old servers and need to purchase new hardware
• Mobile workforce or multiple remote offices that need access to common applications and data
• The business operates with a large, virtual workforce
• The industry of the company has heavy regulatory compliance obligations such as HIPAA
• Company does not operate with many bandwidth-intensive applications
• Company is in growth or downsizing mode
• Executives are focused on solving business problems and not interested in IT.
  

In-house Servers are Sometimes More Desirable than a Cloud-based Service

Pros of In-house Server

• Gives you complete control over the location, security, and size of hardware.
• No outside vendor, such as the cloud provider, has any access to your data.
• Internet connection is not required to access data when in the same location with the server.
• Can be more cost-effective over the life of the server with proper maintenance.

Cons of In-house Server

• Servers have a finite life and need to be replaced every 3-5 years depending on the usage. Servers are costly to purchase, set-up and maintain.
• Needs a secure physical space with proper ventilation and cooling to install the racked server.
• IT maintenance and support needed to keep the server operating smoothly and securely.
• Data backup systems require physical hardware and cloud storage to protect yourself from data loss during a disaster or catastrophic server failure.

An In-house Server is Recommended for the Following Types of Companies

The cloud is not always the best solution for a company so we believe an in-house server is suitable for companies with the following:

• Single location office with suitable space and security for a server
• Remote data backup and disaster recovery plan in place
• Non-critical access to data or operations in the case of a disaster such as a hurricane
• Continuous monitoring and patching of server and workstations
• Has cash to purchase a server and wants a lower monthly cost
• Complex applications that need to be available on individual employee workstations

What Do These Options Cost?

The cost of either option is critical to any business decision. Cost estimates for the cloud-based server can be provided by your provider and are usually quoted on a per-user basis. Additional storage costs may also be quoted which should provide estimates for future cost increases when additional storage is required. Thin client workstations for your employees are usually inexpensive and sometimes priced into the monthly cost. The per-user pricing is usually attractive to companies that desire their IT costs to be predictable and steady.

The in-house server option will be more complicated to a price depending upon the size and processing capability of your required server. Additional factors that will need to be considered in the pricing of the in-house option is the cost of the workstations, including the hourly cost of set-up and installation of software. In-house server proposals should always include back-up and recovery options and the service availability and costs.

One model for IT service is the “break-and-fix” model which typically provides minimal IT services to a company such as patching and monitoring for a low monthly cost but requires hourly billing for any additional services or repairs. The break-and-fix model is sometimes attractive to companies because of the lower monthly cost but hourly service costs can fluctuate month-to-month and sometimes costs a company more. The break-and-fix model sometimes leaves the business owner upset at the hourly bills charged because IT issues are unpredictable and the monthly billing fluctuates.

More businesses are looking toward IT service companies to provide IT service at a flat-rate fee which aligns the business owner’s desire for continuous uptime at a fair price with the IT service company’s job of keeping the server and workstations free from problems. Flat-rate billing typically is billed on a per-user basis but allows the business to better predict their monthly IT spending.  The IT company has the incentive to catch and fix any problems with the server or workstations in a timely manner.

Implementing Your New IT Platform

Once the decision is made it’s time to work with your IT service provider to put together an implementation plan that transitions your data and business operations to the new platform. Put together a list of questions that addresses the ramifications of the implementation project on the users before, during and after the transition.

Ensure that all stakeholders are on board with the transition timing and consider a user-centric approach that allows for more buy-in for the new processes. User-training should be tailored to reduce frustrations and increase communications between the user and the IT providers so the adoption of the new platform goes smoothly. 

Some approach this as a marketing challenge where the benefits are touted and your employees’ productivity is improved. Elicit feedback from across the company’s user base to identify possible issues before the implementation.

IT is quickly changing, improving and reacting to the various security issues that have arisen in this highly connected and data-heavy business environment. The decision of an in-house server versus the cloud should be done after considering which option best supports your company’s business model. Your IT professional should be able to give advice that is specific to your company’s needs.