Wednesday, May 5, 2010

Reasons to Keep Your Servers

Next up... with all the great reasons to move in to the cloud, why would anyone want to host their own server any more?

Stay tuned...

Why Move to the Cloud?

The primary reason most companies move operations in to the cloud is... MONEY.

In the traditional way, a company needing a new e-mail server would:
1. Buy a new server ($3,000 - a relatively inexpensive one)
2. Buy an operating system and the e-mail software ($2,000 - Windows Server & Exchange)
3. Pay employees or consultant (15 hours or around $2,000) to install the whole thing

That's a capital outlay of $7,000. It's likely that server will need over the course of a 4 year lifespan:
1. $2,000+ in electricity and cooling
2. Hardware and software labor services up to 4x the cost of the server (say $6,000)
3. Hardware upgrades and replacement ($500 for misc components probably after 3-year warranty expires)

If you consider the total cost of owning that server over the course of 4 years then, the total is $15,500 for one single server.

Let's just say that e-mail server was going to host 30 e-mail mailboxes and do nothing else. You can purchase as a service in the cloud the very same e-mail solution for $10 per month per user. For 30 users thats $300 per month or $3,600 per year or $14,400 for 4 years.

You just saved over $1,000. You'll probably get more for your money too. Consider that:
1. Your server will be hosted in a Tier 1 data center with redundant power systems. It'll most likely be up more when hosted than if you keep it onsite.
2. They'll provide backups which might cost you $1,000 or more to just purchase software for, let alone maintaining the system for 4 years.
3. You'll get highly trained engineers that are pros at keeping servers running 24/7 and that's all they do. This will include monitoring of systems, patch management, etc.
4. You have a monthly expense rather than a capital outlay. That means you get to deduct the business expense on taxes rather than tracking depreciation.
5. The service will always be on the latest version of the software. No upgrades for you to manage.
6. You can add more mailboxes as needed and remove them when you don't need them. Never pay for more than you need.

Rinse and repeat. Every four years you save your $1,000+ when you continue to use the cloud rather than buy a new server.

What is Cloud Computing?

Let's start with a definition from Wikipedia:

"Cloud Computing is Internet-based computing, whereby shared resources, software and information are provided to computers and other devices on-demand, like a public utility."

Now I'll break it down into something a little easier to wrap your brain around:
Any computing service you use that doesn't live on a traditional computer server in your office is probably "Cloud Computing."

Many companies use an e-mail filtering service that removes spam and viruses before delivering that e-mail to employee inboxes. That's cloud computing.

Some companies now send a copy of their data backups to the internet for offsite storage. That's cloud computing.

A recent popular example of cloud computing is, a customer relationship management (CRM) application you access through a web browser. You could also consider Facebook a cloud computing application.

There are a couple different levels of cloud computing:
1. Applications (Facebook, Salesforce, Hotmail, etc.)
2. Platforms (places for people to build applications and not put them on their own servers)
3. Infrastructure (replacing or augmenting your own servers or networking equipment with some in the cloud)

For the purpose of this discussion we'll really just concentrate on applications and infrastrcture. We'll let people who do computer programming worry about the platforms for now.

The "Cloud" and Your Business

What is the "Cloud" and how will it affect your business? You may be using the cloud right now and just not know it. What's available, what's good and what are your peers doing?

In this series of posts I'll be starting off with some general information on the "Cloud" and how Redwood's clients are using it now. We'll move on to where I (and the industry) see it going in the next couple years. If you're not already using something in the cloud now I'd be surprised and you'll be doing a lot more there very soon!
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