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Wednesday, May 5, 2010

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.

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