Is your server(s) getting old? Have you pushed it to the end of its lifespan? Have you reached that stage where it’s time to do something about it? Join the crowd.
You’re now at that decision point that so many other business people are finding themselves at this year. And the decision is this: do you replace that old server with a new server or do you go to “the cloud”.
Everyone’s talking about the cloud nowadays so you’ve got to consider it, right? This could be a great new thing for your company! You’ve been told that the cloud enables companies 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 are, using whatever devices they want to use. Perhaps you’ve stumbled on this analysis that said that small businesses are losing money as a result of ineffective IT management that could be much improved by the use of cloud based services. So it’s time to chuck that old piece of junk and take your company to the cloud, right? Well…just hold on.
If you’re a startup or a very small company, a company that is virtual, or whose employees are distributed around the world, a cloud based environment is likely the way to go. But maybe that’s not you. Maybe you know you represent the very core of small business in America. You are just like one of my company’s many smaller clients. And what are these companies doing this year when it comes time to replace their servers?
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. Instead, they’ve been buying new servers.
Buying new servers? What about the cloud?
For many of my clients in the past 90 days it was time to replace servers. They had waited as long as possible, hoping to get the most out of their existing machines. Sound familiar? But the servers were showing their age, applications were running slower and now the companies found themselves growing their infrastructure and their old machines were reaching their limit. Things were getting to a breaking point, and all six of my clients decided it was time for a change. So they all moved to cloud, right?
Nope. None of them did. None of them chose the cloud. Why? Because all of these small business owners and managers came to the same conclusion: it was just too expensive. Sorry media. Sorry tech world. But this is the truth. This is what’s happening in the world of established companies.
Consider the options. All of my clients’ evaluated cloud based hosting services from Microsoft, Rackspace and smaller regional cloud providers. All of these popular options are viable and make sense, as evidenced by their growth in recent years. But when all the smoke cleared, all of these services came in at about the same price: approximately $100 per month per user. (The important thing to note is the $100/month per user is just for the server infrastructure so you still need to provide and support the desktops.) This is what it costs for an existing company to move their existing infrastructure to a cloud based infrastructure in 2014. We have the proposals and we’ve done the analysis.
Suppose you have maybe 30 people in your company who need computer access. Suppose you are satisfied with your existing applications and don’t want to go through the agony and enormous expense of migrating to a new cloud based application. Suppose you don’t employ a full time IT guy, but have a service contract with a reliable local IT firm.
Now do the numbers: $100 per month x 30 users is $3,000 per month or $36,000 PER YEAR for a cloud based service. How many servers can you buy for that amount? Imagine putting that proposal out to an experienced, battle-hardened, profit generating small business owner who, like all the smart business owners I know, look hard at the return on investment decision before parting with their cash. For all of our clients the decision was a no-brainer: they all bought new servers and had us install them.
No one could make the numbers work. No one could justify the return on investment. The cloud, at least for established businesses who don’t want to change their existing applications, is still just too expensive.
Please know that these companies are, in fact, using some cloud-based applications. They all have virtual private networks setup and their people access their systems over the cloud using remote desktop technologies. Paul-Henri Ferrand, President of Dell North America, doesn’t see this trend continuing. “Many smaller but growing businesses are looking and/or moving to the cloud,” he said. “There will be some (small businesses) that will continue to buy hardware but I see the trend is clearly toward the cloud. As more business applications become more available for the cloud, the more likely the trend will continue.”
He’s right. Over the next few years the costs will come down. Your beloved internal application will become out of date and your only option will be to migrate to a cloud based application (hopefully provided by the same vendor to ease the transition). Your technology partners will help you and the process will be easier, and less expensive than today. But for now, you may find it makes more sense to just buy a new server. It’s OK. You’re not alone
