Small Business Move To Cloud? 8 Factors Say No
4. Cloud servers may not save a small business much money. A cost analysis I did for a client considering a move of their server to the cloud found the monthly cost to be about the same as they was spending for local support, hosted email and online backup. They didnt consider the cost to upgrade their Internet connections and firewall. Their local server is stable and works well, so they had no operational or economic incentive to migrate. The cost of the cloud server and virtual PCs were about $100 per user per month, but that didnt include some services that might have driven the fee higher.
5. Your business may have regulatory or client requirements for confidentiality that require local servers. Medical providers face HIPAA requirements for privacy, and other industries have their own stringent laws and guidelines.
6. Physical servers have declined in price while offering increased performance and storage. I installed an entry-level server for a small business workgroup of four people for $1,000. A high-end server costs between $4,000 to $6,500. They can be leased to avoid the capital expenditure and obtain operating expense write-offs often cited as cloud services advantages.
7. Your industry application may not yet have a cloud equivalent, and the vendor pricing to go to a cloud solution may not be as attractively priced. One of my CPA clients looked at his tax providers virtual office (cloud server) solution. The vendor pricing was thousands higher than his local solution, because he was still required to pay the licensing cost of the local software. The vendor priced its cloud offering for new clients, not for existing clients already invested in the local software.
8. Clients were wary of where their servers and data were hosted. You should ask about the data center location(s) and specifications, vendor support and redundancy, and whether your virtual servers are on physical servers shared with other customers. That can slow performance and put your virtual server at risk, if the host becomes infected with malware. Not a situation a small business can afford to be in.
Cloud solutions will decline in price with time, and as vendors convert their local industry applications to cloud-based applications, eventually businesses will end up hosted entirely in the cloud. But that migration will take years. In the meantime, most small businesses will use a combination of local infrastructure and cloud services. Consider if the cloud is right for your business, or if you should stay put.
Other articles by David:
The Changing Face of Personal Computing
Small Business And Personal Computers Still Going Strong
5 Key Small Business IT Managed Benefits
Windows Server 2012 for Small Business
Backing Small Business Up in the Cloud
6 Benefits of Moving Anti-Spam to Cloud
