The battle of costs – On-premises vs Cloud-based solutions

Security and accessibility are two common concerns among organizations that are yet to move to the Cloud. The larger concern—and one that isn't as apparent as the other two—is the lack of clarity about the cost of owning an on-premises infrastructure versus that of moving to the Cloud.

In this blog, we'll be looking at both the conspicuous and hidden costs associated with both on-premises and Cloud-based solutions. Our intent is to:

• Equip you with the necessary insights to make a well-informed decision about migrating to the Cloud
• Help you gain a competitive edge through scaled-up innovation and growth

The iceberg image below illustrates a comparative analysis of the complexities involved in implementing an on-premises system versus a Cloud-based one:

Source: https://www.peoplehr.com/blog/2015/06/12/saas-vs-on-premise-hr-systems-pros-cons-hidden-costs/

When compared on the basis of various parameters, the following differences are observed:

1. Setting up and implementation
   a. Traditional on-premises software:
   • Involves both software and hardware expenses, which add up as extra costs
   • Requires massive investments for upgrades and maintenance
   • Needs million-dollar spends for installation and implementation post-purchase. Valuable resource wastage is also a side effect
   
   b. Cloud-based software:
   • No hardware or software purchase is required. Only costs are those of monthly subscriptions
   • Cloud services providers handle infrastructure- and upgrades-related costs. Upgrades happen seamlessly over a weekend or during off-business hours
   • Subscribers have the flexibility to start, end or modify subscriptions according to their needs
2. Security breaches and integration
   a. Traditional on-premises software:
   • Close proximity of servers compromises on-premise systems' security
   • Legacy data centers are threatened because of outdated security measures and software, leaving entire systems open to attacks
   • Integration is complicated, laborious and requires meeting many parameters-based criteria to obtain accurate results
   
   b. Cloud-based software:
   • Physical data breaches due to negligent employees are less likely to happen since data is stored on the Cloud
   • Cloud providers invest (on priority) in security protocol and software to prevent data breaches and cyberattacks
   • Comes with several built-in functionalities to support quick and seamless integrations
3. Scalability
   a. Traditional on-premises software:
   • Being bound by limited physical space to accommodate hardware means there are costs associated with expanding storage after a certain span of time has elapsed
   • Handling of new infrastructure needs a larger workforce. This means hiring new employees which is an additional cost for a company
   
   b. Cloud-based software:
   • Scaling up cloud-based software is simpler since physical space constraints do not apply in this case
   • Cloud-based service providers offer technical support (setting up plus maintenance)—in contrast to on-premises systems—so there is no additional cost on that score

Measurable success

"If you can't measure it, you can't improve it." – Peter Drucker, Eminent management consultant

To gauge whether you should (or should not) migrate to the Cloud, you need full visibility into your metrics. If you choose to stay with a traditional on-premises system, you are likely to endure unexpected expenditures related to maintenance, support, hardware and software (to meet unplanned requirements).

Source: Aberdeen Group studies

Moving to the Cloud not only allows your business to lessen capital outlay and operating costs, it also provides reliability and scalability.

With technology evolving even as this piece was being written, the Cloud is proving to be the most viable option for businesses of all sizes across industries from a flexibility, enhanced security, and significant cost and time savings perspective.

At Columbus, we have been helping organizations make the journey to the Cloud for more than three decades. We specialize in offering the best packaged solution to organizations depending on their unique needs. Please write to us to learn more at us-marketing@columbusglobal.com.