It is a recurring question for organizations: do we again opt for the purchase of a local server or do we switch to a cloud solution? A lot has already been said and written about the cloud: a collective name for ICT services that do not run locally, but online. Where some applications are still running on-premises, they are increasingly being moved to an online environment, in the cloud. Despite the growth of business software in the cloud, we still see that some organizations have doubts about a possible switch from (parts of) their business applications to the cloud. When it comes to business software in the cloud, some organizations are still in the dark. In this blog we list the differences so that you can make an informed decision.
When choosing between local server or cloud, the cost aspect is one of the most important considerations for many organizations. The costs of working in the cloud or on with a local server environment (hardware and / or software) differ, particularly in the area of transparency and the ‘unforeseen’ costs.
If you work with local server software, only the costs for the software license and annual maintenance are known in advance. These costs amount to approximately 9% of the total costs, according to research by Nucleus Research *. The majority of the costs of local server software are in the running costs, such as customization, implementation, hardware, ICT staff and training. The costs for a server room, and the management and security of this, must also be included in the total cost of an local server solution. In addition, in some situations you can incur unexpected costs, for example for third-line support in case of a malfunction of software that is not covered by the standard maintenance contract. Or the costs of a server that needs to be replaced in the meantime or needs extra capacity. To avoid this type of unforeseen costs one may consider moving (parts of) the business applications to the cloud.
The costs of cloud solutions are more transparent compared to a local server software. Many cloud suppliers offer their software on the basis of a monthly subscription, where you only pay for the capacity (administrations, users, documents or transactions) that is actually used. This does not require a large investment at once and shifts investment costs to operational costs. Research by Nucleus Research * shows that 68% of the total costs are in the monthly subscription, the other costs are in the implementation, customization and training. The management and maintenance of the hardware and underlying infrastructure lie with the cloud supplier, which makes the costs of using the cloud predictable. Nevertheless, the migration of local server solutions to the cloud entails costs. As a result, working in the cloud is not immediately cheaper, but you ultimately pay for a stable environment at fixed, transparent costs without investment and unforeseen costs. This is usually in the form of a monthly subscription so you are not tied to long contracts and you never pay for licenses that are (no longer) used.
2. Maintenance and updates
In the field of maintenance, the use of local server software is more labor intensive than working in the cloud. In the case of local server environments, the infrastructure (server, Microsoft licenses, etc.) must be renewed / replaced every few years, which means that an investment has to be made in this hardware again, whereby you also invest in the situation at that moment ( and possibly the growth that is foreseen for the next two years). In addition to management and maintenance of the hardware, software updates must always (manually) be installed by the supplier or your own IT administrator. This time actually also costs money. Because an installation or update is not automatically implemented, we see in practice that organizations sometimes drop an update because the IT department simply does not have time to install an update.
When using a cloud service you do not have to invest every so many years in the renewal of the infrastructure (server, Microsoft licenses, etc.) which makes you more flexible to respond to changed questions / wishes from the organization and also much easier to grow (or shrink) if the situation demands it. With a cloud environment, the hardware maintenance is completely taken care of by the cloud supplier. With a cloud service you always have the latest version of the software, because you automatically join the update cycle of the cloud supplier.
Another big difference between local server and cloud software is the flexibility that the cloud offers of upscaling or downscaling compared to the more static local server architecture. In a local server (hardware) environment you invest in pre-estimated server capacity, but you do not know in advance whether the capacity matches the needs and wishes. In practice, the underlying hardware is set up either for average use or for maximum use. As a result, you run the risk of performance decreasing at peak times or vice versa that sometimes more resources are used than is necessary or, if the hardware is set up ‘more spacious’ than required, that resources remain unused. Fluctuations in performance can be prevented by adding more processor power to the server, which requires an effort (in time and money) from the IT department. In addition, with a local server software option an investment is made in advance (number of users, documents etc.) that are required at that time. Additional investments must be made in this for the growth of the organization. Conversely, in the event of a contraction in the organization, the license cannot usually be adjusted immediately, so t in some cases you end up paying for non-users.
If the own hardware environment (servers) in the company network is compared with the purchase of servers in a data center, then also for this it must be scaled up with increasing load on the servers. The supplier of a cloud solution continuously measures the use of the cloud capacity and checks and reports this for internal and / or external use. Subsequently, (automatic) up or down can be done if there is a need for it. Peak moments are thus easily and quickly absorbed and the extra server capacity can then be switched off just as easily as is no longer necessary. As a result, performance is no longer a problem (it is always perceived as ‘equal’) and you can fully focus on the ‘core business’. It is also easier to scale up or down in capacity (administrations, users, documents or transactions) of the software. You only pay for the functionality or capacity that you actually use, so that you as an organization use an efficient platform that offers the opportunity to grow or shrink when the situation demands it.
4. Flexibility and access
Organizations that want to give their employees access to business applications on a place-independent basis and on different (mobile) devices, benefit from working in the cloud. With local server software, you usually have limited or even no access to business applications outside your own office. You only have access to business applications if the software is physically present at the business location and you are using a computer that is connected to the company network. Via a VPN connection, users can also gain access to the local server environment from locations outside the office, where access and accompanying safety are the responsibility of the customer and not the software supplier. Here, some considerations have to be made between user convenience and safety.
The cloud offers a lot of flexibility in place and time independent work. Employees have access to company data anywhere, on various devices, provided they have an internet connection. The cloud eases the possibilities for cooperation between colleagues or with external parties, because files can be edited and shared directly from the cloud. Because cloud services always synchronize (if your device has an internet connection) you always work with the latest version of your document. Even when you delete something, almost every cloud storage service (eg Dropbox, OneDrive, SharePoint and Google Docs) offers extensive version management. As a result, it is no longer necessary to store different versions of documents on a network drive with features such as 1.0, 2.0, draft, final and the like. The moment you do not have a connection with the internet, you work with locally stored files. Once you are back online, they are updated in the cloud on all devices. This means you never lose your documents.
A disadvantage of the cloud is that everything falls or stands with a good internet connection. But this can also be a risk with using a local server environment in the event of the company network crashing, employees will not be able to work. At least with cloud software option, employees can look for alternative workplaces in case of a poor Internet connection at the office so that they can continue to work. In principle, any location with the internet can be your digital work environment: whether it is at home, in a café, restaurant or hotel is up to you.
Local server software is well protected, because you know emotionally exactly who has access to the data on the server. Often, local server hardware and software is can give a sense of ‘control’. However, control is not the same as safety. Safety rests on how well and deep each organization secures insight and information of its employees and visitors and what they can access. Moreover, the physical security of companies, and in particular the server park, is often not optimal for practical reasons. Unauthorized access to, or even theft of, data from the physical location is therefore possible, for example by plugging in a USB stick in a server or in a computer that is in direct connection with these servers. If you want to secure a local server environment with associated local server software, both physically and virtually, up-to-date, then a price tag is attached.
Because cloud services can only be approached via the internet, there are security risks. However, this does not differ much from the risks that a local server environment would entail, because it is also in some way open to the outside or connected to the internet. The difference is that in a secure data center where the cloud servers are operational, hackers and builders of viruses, will not be able to enter or penetrate quickly, since data centers have more knowledge and resources available and can invest in maximum security. Examples include security at the central level, security services, such as a managed and hosted firewall, encryption of data etc. Access to servers and adjustments made are recorded in logging systems, with which every implemented action is clear and abuse is practically impossible in any case is limited to a minimum. Physical access to a data center is limited to a few people and is virtually impossible for external parties / visitors by using physical security, gates and other access controls. It is one of the fundamental offerings that a cloud solution provider would have to secure its infrastructure to provide a safe environment for its customers.
6. Choose the solution that suits you
Back to the question in the title of the blog: local server or cloud? Unambiguous advice is actually not possible. The most important thing is that the cloud is not an objective in itself and that every organization chooses an environment that best fits the business context. Depending on the information structure, investments, ambitions and business strategy, it may be interesting to switch from on-premise or local server solution (software on own servers and computers) to a cloud solution (software via the internet), or a combination of both in the form of a hybrid environment.
In summary, the prejudices and doubts that exist about Cloud software are largely unfounded. The cloud is not always cheaper, but all visible and invisible cost components are included and made transparent. In fact, you invest in availability and security and you do not have to worry about updates, maintenance and the scalability of your infrastructure. The real question is therefore: how much is this unburdening worth?