The cost of IT

IT costs a lot of money, but one thing that we love to do at CCS is research and create charts, especially when it comes to concepts like TCO (total cost of ownership) and how it is more expensive to host on-premise server solutions. What do I mean by this? If you were to buy a server, did you know that over five years, it would have cost you more to own that server than it would have been to have it stored at a data center? 

You would have to power the server, backup it, maintain it, and, most importantly, pay for it. The latter is generally done upfront or through a payment plan with the manufacturer. 

Consider this, if you pay for a hosted server from Microsoft, Amazon, or IBM, you will only pay the rental fee for the usage of the server or have a fixed rate of hours that the server is on (generally, 720 hours a month.) This means that it is really a pay-per-use concept. This also decreases your general cost of maintaining a server on-premise by halving the cost and lowering your liability of having the server on-premise. 

This means that your information is held in their liability, yes, but the maintenance liability is off your shoulders and budget. Therefore, you won’t spend money on expensive backup systems, maintenance, network penetration testing (fake hacking to verify security integrity), and maintaining physical control of the server room.  

To calculate this, we used the formula of purchase price + incurred cost of useful life. We calculated an estimated server price of $20,000 as a direct purchase price (low end) and a yearly incurred price of $31,182 (which breaks down to $7,182 per year in power consumption at 6.25Kwh and $24,000 for a proper backup system). 

“Now that’s a lot of money,” you may say. For tech companies and mega-corporations, it is a Tuesday. Compare this to a hosted AWS, Microsoft, or IBM server, which costs approximately $700 for 720 hours a month, and you get $8,400 a year. 

The cost of an on-premise server solution should be considered for businesses of all standards, sizes and stages. Contact a local IT company for assistance in procuring new servers or pointing to the right solution that fits your business and, most importantly, your budget.