Why the cloud is more cost effective than your servers

As a business grows it inevitably faces the choice between investing in on-premises server infrastructure or cloud based infrastructure to manage their IT needs. However, choosing the wrong investment for your business can have dramatic effects on long term profitability, so picking the right investment is necessary. This critical choice is often difficult for decision makers to properly qualify. Knowledge of the benefits and limitations of on-premises and cloud based IT infrastructure isn’t common and is time consuming to acquire. Yet for most companies, investing in the cloud is the best possible option because of the cost.

Cost

For many businesses, cost is the final factor deciding how to invest. When it comes to the price of computing, classic on-premises server infrastructure and cloud infrastructure is handled very differently and factors into the cost of IT in varying ways and often cloud computing services are the most cost effective and efficient. I like to understand the difference between the cost of on-premises servers and cloud computing as the difference between paying for the capacity to do work as opposed to actual work performed.

On-Premises Servers: The capacity to do work

An investment in on-premises server infrastructure is an investment in physical hardware for computation. An on-premises server can offer consumers a great deal of power but usually this power is underutilized. For example, servers don’t get turned off in the evenings or on weekends and are likely not doing much more than handling scheduled routines and simply staying powered on. Your business pays for this on-time regardless of how much the system is being used. Whether that is in the form of electricity to keep your server running all night, or in maintenance costs for a server administrator to monitor your system, you are paying for the capacity to do work instead of the work itself. This is different with cloud computing.

Cloud Computing: Work actually performed

Investing in cloud computing is an investment in a system where you pay for the resources you use. Essentially you don’t pay for what you don’t use and in effect there is no cost for under utilization. Instead overall cost is based on Gigabytes of RAM, storage space, and processing power expended. In addition, the costs of electricity, repair, security, upgrades, etc. are included in the price of each resources used. Moreover, since your cloud provider is maintaining these systems on a massive scale, each data center hosting and processing thousands of clients’ data, efficiency is maximized. With cloud computing the savings of economies of scale are passed on to you.

Overall most businesses get the maximum benefit by leveraging cloud services and cloud based infrastructure instead of purchasing their own server. With cloud services, management, maintenance, and operating costs are included in a monthly fee and, since you are paying for the processing power used instead of a server’s capacity, you will save money over time.

At Syvantis, we specialize in migrating on-premise instances of Dynamics GP to the Azure Cloud. If you're interested in learning more about the quick process, or how much money you can save by making this change, let us know! 

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