Should you replace your old server or move to the cloud?

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moving to the cloud
Is your current server or servers becoming outdated? Have you pushed it towards the end of its lifespan? Perhaps you have reached that stage where it’s time for you to do something about it? Join the crowd. You’re now at that decision point that so many other business are finding themselves at the moment. And the decision is this: do you replace that old server with a new server or do you move to the cloud?

Everyone’s raving about the cloud these days so you’ve got to consider it, right? This might just be a great new thing for your company! You’ve discovered that the cloud enables businesses like yours to be more flexible and save on their IT costs. It allows free and easy access to data for employees from wherever they may be, using whatever devices they would like to use. Maybe you’ve seen the recent survey by accounting software maker MYOB that claims companies that adopt cloud technologies enjoy higher revenues. Or perhaps you’ve stumbled on the apparent fact that small enterprises are losing money attributable to ineffective IT management that may be much improved through cloud based services. Or the poll of more than 1,200 small business owners by a technology re-seller which claimed that “…cloud users cite financial savings, increased efficiency and greater innovation as key benefits “across all industries, storage and conferencing and collaboration would be the top cloud services and applications.”

So it’s time to chuck that old piece of junk and bring your organization towards the cloud, right? Well just wait.

There’s no question that if you’re a start up or possibly a small company or a company that is virtual or whose employees are distributed all over the world, a cloud based environment maybe the best option. Or maybe you’ve got high internal IT costs or require more computing power. But maybe that’s not you. Maybe your business sells pharmaceutical supplies, provides landscaping services, fixes roofs, ships industrial cleaning agents, manufactures packaging materials or distributes gaskets. You are not featured in the Fastest 100 in Australia and you’ve not been invited to present in the next Disrupt conference. But you know you represent the core of small enterprise around Australia. I know this too. You are similar to my company’s clients, so what exactly are these businesses like yours doing this year when the time comes to change their servers?

Well for the most part these very smart owners and managers of small and medium sized businesses who have existing applications running on old servers are not going to the cloud. They been buying new servers to replace the existing hardware sometimes combining this replacement infrastructure with the cloud services that suit some of their purposes and improve their outcomes, mostly hosted email and backup services

Wait, buying new servers? What about the cloud?

A number of our clients have reached this point over the past few months, they had all waited as long as possible, conserving money in a patchy economy, hoping to get the most from their existing machines. Ring a bell? But the servers were showing their age, applications were running slower and today as the companies found themselves growing their infrastructure their old machines were reaching their limit. Things were getting to a breaking point, and all these clients decided it was time for a change. So each of them moved to cloud, right?

Nope. None from them chose to replace their old infrastructure completely by moving all their applications and processes to the cloud. Why? Because all of these small business owners and managers arrived at the same conclusion: it just didn’t make sense, it was too expensive and combined with the cost of a decent internet connection to support the environment we just couldn’t make the numbers stack up, Sorry media, Sorry Tech world, but this is actually the truth. This is what’s happening in the realm of established companies.

Consider the options. All of our clients’ wanted to know about cloud based hosting services. We as a Managed I.T Services provider with cloud based solutions and hosting arrangements with all the major players provided competitive rates to move their existing applications (Office, accounting, CRM, databases) to hosted servers and manage them offsite. All of the popular alternatives are viable and make sense, as evidenced by their growth in the last few years. But when all of the smoke cleared all the hosted services we considered were available at approximately the same price: approximately $100 each month per user. This is exactly what it costs for an existing company to shift their existing infrastructure onto a cloud based infrastructure in 2014.
We’ve got the proposals and we’ve done the analysis.

You’re dealing with the same thought process, so now put yourself inside their shoes. Suppose you’ve got maybe 20 people in your organization who require computer access. Suppose you are satisfied with your existing applications and don’t wish to experience the agony and huge expense of migrating to a new cloud based application. Suppose you don’t have a full-time IT guy, but have a Managed I.T Services contract with an experienced local IT firm like us

Now do the numbers: $100 monthly x 20 users is $2,000 a month or $24,000 A Year for a cloud based service. How many servers can you buy for that amount? Imagine putting that proposal over to an experienced, battle-hardened, profit generating small company owner who, similar to the smart business owners I do know, look hard at the roi decision before parting with their cash.

Not a single person could make the numbers work. Hardly any one could justify the roi. The cloud, at least with regard to well established businesses who don’t want to change their existing applications, is still way too costly.

You should know that these firms happen to be making use of several cloud-based programs. They just about all currently have virtual private networks put in place and their people access their systems on the cloud making use of remote desktop technologies. Like the respondents in the previously mentioned research, they sign up for on line cloud backup solutions, share some data files on DropBox make their calls through Skype. Most of their employees have i-phones and Droids and want to use mobile phone applications that rely on cloud data to make them more advantageous. These applications didn’t really exist not long ago and also their growth as well as benefits can’t be denied.

During the coming years the prices should come down. Your much loved internal application will become out of date and your only choice may be to move towards a cloud based application (hopefully offered by the same vendor to ease the transition). Business Works as your technology partner will help you plus the process will hopefully be simpler, and less expensive compared to today. But for the time being, some find it is more efficient to just buy a brand new server. It’s Fine. You are not the only one.