Cloud or on-premise? Five hidden costs to factor in

To cloud or not to cloud? That is the question. And it’s a question many of our clients ask as our Imagen video management solution offers the choice of an on-premise, cloud or hybrid solution. There are many myths surrounding the cloud and the choice between a cloud and on-premise solution should not be made simply on cost alone. It comes down to your business requirements and its specific use cases, as well as the cost of the service. There is the misnomer that the cost of an on-premise installation begins and ends with how much new hardware and software is needed and, for a cloud solution, there is only a monthly service cost to consider. Both assumptions are incorrect. Here are five hidden costs that many companies forget about when trying to compare the cost of an on-premise versus cloud solution:

1. The electricity bill

On-premise servers are improving in terms of energy efficiency but their electricity consumption rates cannot be ignored. The average server combines multiple socketed processors, hard drives in RAID arrays, dual power supplies and various other components, such as a stable cooling system to keep it up and running. Estimating your business’s electricity bill is difficult, unless you opt to use a data centre with powerful reporting equipment, but electricity costs do need to be taken into account.

2. Bandwidth - your best friend or worst enemy?

The cloud may beat on-premise installations in terms of energy costs but they can slap users with another nasty surprise - they may not offer enough bandwidth. In-house servers are only limited by your internal network’s infrastructure - but the cloud can be limited by bandwidth issues. This issue is dwindling as cloud installations leverage bandwidth in increasingly clever ways but it is worth bearing in mind - especially within the world of video management where bandwidth limits are often stretched to breaking point. That’s why Imagen is highly scalable and flexible enough to grow with you and as your requirements, and bandwidth needs, change.

3. Outbound bandwidth

Cloud virtual servers are a great solution for any business as they require minimal maintenance and achieve maximum uptime. However, some cloud providers may let you move as much data into their cloud servers as you like - but it’s a different story when it comes to pulling data out. Microsoft’s Azure system (which is fully supported by Imagen) has a fairly generous 5GB of free outbound bandwidth. Always check your outbound bandwidth limits and pricing with any cloud installation.

4. Replacement costs

Nothing lasts forever - least of all a server system, which you can expect to run out of steam every few years. These costs are often ignored by decision makers as they are ‘too far in the future’ - but upgrades can be expensive and need to be added into any total cost of ownership calculations. Which leads me onto my next point...

5. The Total Cost of Ownership

Comparing the recurring costs is a useful exercise but the real crux of the costing issue is the Total Cost of Ownership (TCO). A thorough TCO evaluation is the most accurate and objective way to compare an on-premise and cloud solution. It negates the disparity between the two solutions and gives you an accurate picture of your costs over the next 10 to 15 years. By combining all the factors mentioned here, along with the more obvious costs such as monthly subscription charges for the cloud or one-off hardware costs for an on-premise installation, you should be able to project and decide which method will cost your business the most over the coming years.   There is often no one answer and this flexibility is reflected in Imagen, as our video management service has the capability to work as an on-premise, cloud or hybrid solution. Get started with a free trial today, or tune into our weekly webinar to find out more.  

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