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Karen Cohen

By: Karen Cohen on August 25, 2023

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Hidden Costs of On-Premise Servers

Cybersecurity | Networking | Cloud | Cost

If you are comparing on-premise and cloud-based server options, make sure you are comparing apples to apples.

Just like with any other purchase, you want to be sure you know all of the facts (including hidden costs) before making this important decision.

Business leaders often look at sticker prices and conclude that cloud-based solutions are significantly more expensive and therefore out of reach for their organization.

After reading this article, you will understand all of the cost factors (hidden and otherwise) that you should be considering when making this important decision.

In this article, I’ll lay out the costs that often escape initial notice when evaluating your options. Once you have that information in hand, you’ll be better positioned to make the server decision that is best for your organization.

What Is An On-Premise Server?

Since the term “server” is often used to refer to a physical or virtual machine or even software that acts like a server, we want to be clear that in this article we are focusing on physical servers and specifically those housed within your organization’s physical space or building.

These servers are known as on-premise (or “on-prem”) servers.  

Why Are Hidden Costs Important?

If you are deciding between leasing and purchasing a vehicle, you want to know all of the hidden costs, right? Comparing the financing agreements is often not enough. You may look at the sticker price and reasonably assume that your lease fee covers all of your payment costs.

On paper, it may look as though leasing is cheaper. But, what happens if you exceed your monthly mileage allotment? Are there fees for terminating the lease early? What about wear and tear?

Although your extra mileage fee may seem negligible (say 20 cents per mile), those fees can add up quickly for those who aren’t paying attention.

What Are The Hidden Costs Of On-Premise Servers?

No matter which server option you choose, there will be fees. Along with the initial capital investment, there are hidden operating fees associated with on-premise servers that are often overlooked when considering server cost.

Knowing what to expect upfront will help ensure that you have no surprises and base your technology decision on an honest comparison of all of the costs.  

1. Downtime

For many organizations that don’t proactively plan, the need to replace a server may not be obvious until it stops working. At that point, if you haven’t installed a backup server, you are stuck with nonfunctioning equipment and unexpected business shutdown.

2. Electricity

If you run an on-premise server, you’ll need to also run a backup server in case something goes wrong with your primary server. That means you are paying for electricity for two servers to function 24/7, doubling your electricity spend.

3. Space

What is the dollar value of the square footage your business occupies? When you have an on-premise server (and maybe a backup), make sure to figure in the cost of the space needed to house it.

4. Security

If your on-premise servers store sensitive information, don’t forget the cost of protecting that information. Whether you invest in a security system with badge-reader only access, cameras or some combination of both, that cost should be factored in as well.

5. Support

You will need an administrator and an appropriately sized internal or external IT staff to maintain and install software. Installing updates is especially important to ensure that your server is as well protected from the latest cyber threats as possible.

Cyber threats are constantly evolving, so updating software is a job that is never done.

6. Scalability

As your business grows and new technologies emerge, the demands on your server will grow. What was enough server space last year, may not be enough in two years. With server life typically estimated at three to five years, you may not be ready to invest in a new on-premise server after only two years.

Where Do You Go From Here?

After reading this article, you understand what an on-premise server is and the hidden fees associated with them. Empowered with this information, you are in a better position to compare your server options.

At Kelser, we believe in providing the honest and complete technology information business leaders need to make important IT decisions.

The truth is that while we provide a comprehensive suite of managed IT support solutions, we know that our solution may not be the best option for your business. Rather than convince you to work with us, we focus on providing unbiased information you can use to find the most effective technology solutions for you.

So where do you go from here? Now that you understand the hidden fees associated with on-premise server solutions, you can make a fully informed decision about which server option is best for you.

At this point, you may be wondering about other server options. Learn the pros and cons of cloud computing to see if it may be the right solution for you.

Hopefully, you have a full complement of IT staff to help you research your options, but if not, external IT resource can help you evaluate the best option for you, Learn your options for external IT support.  

If you are considering working with an external IT support provider, explore several options to ensure you get the right fit for your organization. And be sure to ask these 10 important questions when evaluating external IT providers.

Prefer to talk with a human? (So do we!) Click the button below and one of our IT solutions experts will reach out to schedule a 15-minute call at your convenience to learn about your business, your goals, your current IT situation, and your technology pain points.

We invite you to explore whether we might be a good fit to work together!

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About Karen Cohen

Karen brings unending curiosity to her role as Kelser's Content Manager. If you have a question, she wants to know the answer.

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