In-House or Hosted Servers: Are you making the right choice?
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.
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Advantages |
Disadvantages |
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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 |
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Provides control over the operating environment – the software and systems that run on the server |
Needs hardware replacement every 5-7 years |
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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 |
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Closeness to users reduces latency thus increases speed of access and performance
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Not scalable. Difficult to scale up or down |
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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 |
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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.
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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 |
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.
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Advantages |
Disadvantages |
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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 |
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No on-site IT investment in hardware, licenses, anti-virus and anti spam softwares. Predictable monthly costs
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Gives up control of security to managed services provider
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No own installation and setup of firewalls, operation system or security packages |
No physical access to the server |
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No investment in skilled IT team to manage the server |
Communication with tech support specialist sitting somewhere else for support |
Breaking Down Costs
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In-House Server |
Hosted Server |
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Server Hardware |
One time capex |
Monthly opex |
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Storage |
One time capex |
Monthly opex |
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Set-up & Installation |
One time capex |
One time capex |
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OS Licenses |
One time capex |
Monthly opex |
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Server Client Access Licenses |
One time capex |
Monthly opex |
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Backup Licenses |
One time capex |
Monthly opex |
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Antivirus/Anti-spam Licenses |
One time capex |
Monthly opex |
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Warranty |
On-going opex |
No |
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IT Maintenance & Support |
Monthly opex. High human resource cost |
Monthly opex. Lower human resource cost |
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Depreciation + overhead costs |
Yes |
No |
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Firewall |
One time capex |
Included |
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High speed internet connection |
Monthly opex |
Included |
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Power, cooling, fire suppression |
Monthly opex |
Included |
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Training costs to IT personnel |
Monthly opex |
Included |
Questions you should consider when weighing your options.
- 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?