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Is Cloud cheaper than On-premises Data Centres?

Cloud has bloomed over the last decade, according to Goldman’s analysts almost 23% of IT workloads now live on Public clouds, and expected to reach 45% in the next 4 years, with the cloud service market reaching a valuation of $1 trillion.

What is the driving force behind this immense growth?

The major factors are Cost, Security, and Accessibility. Cost is the main factor that most of the enterprise consider before making any decision. IT workloads can either be on Cloud or on-prem Data Centres.

On-Prem Data Centres: On-premises data centers are a group of privately owned & controlled servers. It is based on Capex (Capital Expenditure) model which means the enterprise must require in-house server hardware, software licenses, integration capabilities, and an in-house IT team to control, administer and maintain the data center and resolve potential issues that may arise. This does not even factor in the amount of maintenance that an enterprise is responsible for when something breaks or does not work. Enterprise with a huge growth potential must also factor in the cost of future upgrades, which are going to be needed with increased workloads.

Cloud: Cloud works on Opex (Operational expense) model which means a third-party provider owns the infrastructure which includes hardware & software and enterprises can subscribe to services and manage their account over the internet, this allows enterprises to pay on an As-Needed basis and effectively scale up or down depending upon overall usage and user requirements.

(Read More:- A quick look at the 4 Most Used Services on Microsoft Azure)

Following are some of the parameters to compare the cost of both:

Infrastructure: – Since the on-prem data center is a Capex which means enterprise must spend a huge sum of money on hardware, software licensing, data backup, IT staff, and space for the housing data center. In cloud computing a third-party CSP pays for all of these and enterprises can choose from monthly or annual subscriptions. So, on-prem have an enormous upfront cost and cloud computing has none.

Compliance: – Enterprises in the health and finance sectors must be compliant with HIPPA, CCPA, etc. Enterprises having on-prem data centers need to recruit staff with proper knowledge about regulations to take care of compliance-related matters. Servers need to be properly configured and maintained to stay compliant, if something went wrong then the whole burden falls on the enterprise itself. Unlike on-prem, Cloud providers (Amazon, Microsoft, Google) spend a huge sum of money to stay compliant. Although the responsibility will be yours if your CSP is not compliant, you can trust the word of big CSP’s like Microsoft, AWS, Google Cloud, etc

Backup: – Enterprises having on-prem data centers are more prone to data loss because data is stored in internal servers and backup as well. Many enterprises choose to use cloud service for data backup even after having on-prem data centers, which is an overhead for enterprises. Enterprises are offered various services to avoid data loss in the cloud such as redundancy (LRS, GRS, and ZRS), retention policy, snapshots, etc. Data is everything nowadays so losing data could be a huge cost for enterprises.

Deployment: – Deployment cost is something which must be born in both the solutions. Although Cloud deployment cost can be lower by outsourcing the deployment service to a CSP partner which is specialized in doing so.

Scalability: – Scaling up or down according to your workloads in on-prem requires capital, time, and manpower, however, it can be done with just a few clicks and at a comparatively lesser cost.

Monthly Management: – When it comes to operating costs in on-prem, it is somewhat fixed. It includes rent for space, electricity cost, and in-house IT staff salaries. In Cloud, you can outsource the management of cloud servers to a CSP partner at a significantly less cost.

If you still have questions about whether cloud computing is a solution to your complex IT problems? Call Mismo Systems today!

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