In-House or Hosted Servers: Are you making the right choice?

in-house or hosted servers

Maybe your business need has outgrown your server performance and you’re thinking of replacing it. Or perhaps your server is dated and not supporting your business like it should. It might be that you’re starting a new business and wondering if an in-house server is adequate or if you should adopt hosted solutions from the start.

In-House or Hosted Servers?

It’s a tough decision that will impact your business on a daily basis. We know there’s a lot to think about, and having more than 18 years of experience at this, we’re here to help; breaking it down for you.

In-House Servers

Managing in-house servers may require initial capital expenditure investments, as well as internal IT staff or engagement of a managed service provider.  With this solution, you’ll also need to refresh your hardware, renew software licenses, perform upgrades, and extend warranties every five to seven years.

On the other hand, you’ll have full control over the infrastructure and the ability to build a solution that’s specific to your business needs.

in-house or hosted servers

Advantages

Disadvantages

Provides physical control over infrastructure, the choice of hardware, including the ease and expand-ability of upgrades  

Requires capital investment – hardware, associated software and high-speed redundant internet connectivity and redundant power supply 

Provides control over the operating environment – the software and systems that run on the server 

Needs hardware replacement every 5-7 years 

Keeps security close to home. Only you can access the servers physically. Corporate data is stored/handled internally 

Requires skilled IT maintenance & support team for setup and maintaining operating System, install security updates, patch updates, etc 

Closeness to users reduces latency thus increases speed of access and performance

 

Not scalable. Difficult to scale up or down 

Fixed cost of infrastructure and salary to in-house team 

If some hardware breaks, you will lose 1/x share of your computing data, along with the data since last backup (depending on the hardware failure). Backup is required set up at different
machine 

Own internal resources and IT team manage the server and a tech support person on staff can address issues immediately

Manual installation and maintenance of standard software, web application, load balancer, firewall, etc.

 

Best suited if long term investment is planned 

If people want to hurt you (or steal), they know where your servers are, physically. You require building physical
security measures yourself (RFID access, CCTV, etc)  

Hosted Server 

Companies don’t have to manage everything on-site, the hosted server is controlled by an experienced Managed IT Services Provider (MSP); relieving the headaches of cooling and housing servers and their related IT staff.  This is a very desirable advantage for many firms that would rather invest their capital into other business areas. Beyond this, it also provides an easily scalable solution that can accommodate changing business needs.

On the other hand, you’ll need a reliable and redundant internet connection from your office and in the event that your internet is down, you won’t have access to the server.

in-house or hosted servers

Advantages

Disadvantages

Scalability on-the-fly and data resides in secure hosted environment  

Contingent upon adequate Internet connectivity. In the event that your internet is down, you won’t have access to the server  

No on-site IT investment in hardware, licenses, anti-virus and anti spam softwares. Predictable monthly costs

 

Gives up control of security to managed services provider

 

No own installation and setup of firewalls, operation system or security packages  

No physical access to the server  

No investment in skilled IT team to manage the server  

Communication with tech support specialist sitting somewhere else for support

in-house or hosted servers

Breaking Down Costs

In-House Server

Hosted Server

Server Hardware

One time capex

Monthly opex

Storage

One time capex

Monthly opex

Set-up & Installation

One time capex

One time capex

OS Licenses

One time capex

Monthly opex

Server Client Access Licenses

One time capex

Monthly opex

Backup Licenses

One time capex

Monthly opex

Antivirus/Anti-spam Licenses

One time capex

Monthly opex

Warranty

On-going opex

No

IT Maintenance & Support

Monthly opex. High human resource cost

Monthly opex. Lower human resource cost

Depreciation + overhead costs

Yes

No

Firewall

One time capex

Included

High speed internet connection

Monthly opex

Included

Power, cooling, fire suppression

Monthly opex

Included

Training costs to IT personnel

Monthly opex

Included

Questions you should consider when weighing your options.

in-house or hosted servers

  •  What level of server performance and capacity do you need now and in the future? Does your hosting decision give you right architecture, and the flexibility you need for the future?
  • What is the cost of downtime to your business, and how does it compare to the price of insuring against downtime with in-house IT resources or managed services?
  • What could go wrong with your applications, and what regular maintenance do they need? Who in your organization has the experience and skills to help you?
  • Do you have internal admin support with technical certification?
  • Can you quickly contact them 24×7 in case of problems?
  • How much time can the admin spend every day proactively checking server logs and monitoring performance to resolve issues before they become problems?
  • Do you have spare parts and servers on hand for quick replacement in the event of hardware failure?
  • Do you have redundant internet connectivity for your inbound and outbound data?
  • Do you have redundant power connectivity from different grids and diesel generator backup in case power fails?
  • Do you have high physical security (i.e., bio-metric and card access, RFID, CCTV, etc.) for your servers – especially to stop disgruntled people from causing harm?
  • Do you have redundant servers for automatic fail-over in case one fails?
  • Do you have application monitoring software in place to proactively catch issues before they become a problem?
  • Do you back up your critical data and make sure that all patches and updates are installed so hackers don’t get in?
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Zenul Jinwala

Marketing Strategist at Dev Information Technology Ltd.
I am passionate, a dynamic thinker and team player responsible for planning, developing, managing and executing marketing strategies to enhance the brand value for DEV IT.

3 thoughts on “In-House or Hosted Servers: Are you making the right choice?

  1. I completely agree with you that online support 24/7 is one of the most important things that every serious hosting provider should have, in the case of some emergency problem!

    • Thank you George for reading the post. I really appreciate that. As you rightly mentioned, 24×7 support for any technical issues that may arise helps to keep the IT operations going smooth without any disruptions.

  2. Could please talk on SWOT analysis of inhouse servers and cloud based storage solutions with respect to health care data storage????

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