BlogOn-Premise Server Vs. IaaS: A Cost Comparison

How many of us remember the room at the end of the office corridor—that ‘server room’ only the IT folks went into? My memories, for one, have started to get hazy. Was there even a room like that? What has changed? The server technology, of course! And it has been a while. But the fundamental question remains: which is better: an on-premise server or IaaS? Let’s do a quick comparison. 

Let’s start with what these terms mean. 

What are On-premise Servers?
On-premise Server

On-premise servers are physical hardware that a team manages and maintains on-site.

The location can be your own or a data center from a third-party vendor but with your team deployed on-site and responsible for maintaining the equipment. 

What is IaaS?

Infrastructure as a service (IaaS) is a type of cloud computing service that offers essential computing, storage, and networking resources on demand, on a pay-as-you-go basis.

IaaS is one of the four types of cloud services, along with software as a service (SaaS), platform as a service (PaaS), and serverless. Read here to see which of the cloud services might be better for your business.  

Why does the business need a server in the first place? 

Here are some of the many reasons why as a business owner, you might need a server: 

  • Your business is ready to scale 
  • You require remote data access 
  • You’re looking to increase connectivity between in-house staff and clients/customers 
  • You’re looking to increase uptime 
  • You want to back up your data 

On-Premise Server Vs. IaaS 

IaaS or cloud server solutions have become a go-to these days. You might have heard many in the business community tell you that IaaS is the way to go about it. After all, on-premises servers are more expensive than other types of computer hardware. While it is estimated that the typical on-premise server costs between $1,000 and $2,500, that could go higher if you require more powerful servers. And there’s the cost associated with the upgrade and not to mention the hardware repairs and all that. 

On the other hand, the same proponents of the cloud might have talked about improved scalability, flexibility, and security as being the advantages of IaaS.

On-Premise Server And IaaS: The differences

Here’s a table that compares the two (in reference to what a small business might need): 

On-Premise Servers IaaS 
Require a high initial investment Requires a low initial investment 
Take up much physical space, as each OS requires a separate server Takes up little physical space, as one virtual server can run multiple Virtual Machines (VMs) 
Have a shorter life cycle due to compatibility issues Virtualization allows greater back-end compatibility and support for legacy applications 
Carry additional costs when hardware needs to be upgraded Virtualization allows the user to change the hardware easily 
Have scalability issues Easier to scale 
Require hardware maintenance Because most hardware is virtualized and represented through software, there is little requirement for hardware maintenance 

It is impossible to compare the two—apples to apples. However, here are some factors that you could take into consideration before taking the leap of faith and choosing one over the other: 

Comparison of on-premise server and IaaS
  1. Time 

On-premise servers include a host of physical hardware that takes time to set up.

If you are short on time and need a server immediately, then IaaS is your best bet. 

Comparison of on-premise server and IaaS
  1. Compliance with regulations 

Many businesses have to comply with governmental and non-governmental regulations.

With stringent compliance, choosing a dedicated on-premise server is the way to go. 

Comparison of on-premise server and IaaS
  1. Specific configuration, management, and support concerns 

If the business has a custom configuration, management, and support concerns, then dedicated on-premise software that can handle a stable workload works wonders.

For a workload that requires constant fine-tuning, the cloud is a better choice. 

  1. Workload  

As noted in the previous point, consistent high-demand workload suits on-premise servers.

If your workloads rarely hit peak demands, you may want to shift to a cloud server. 

  1. Foreseeable Upgrades 

Depending on anticipated workloads, upgrades need to be made.

If you foresee higher workloads that can be met only with specific server requirements, a dedicated server would be best.  

  1. Preferred cost management  

If you want to pay higher upfront costs and your requirements are specifically that the on-premise server can meet, then choose that.

Otherwise, given the lower capital outlay, IaaS is the best as it would mean spreading expenses over time. 

In Conclusion

Whether you’d need an on-premise server or IaaS depends on the kind of business that you own and what your specific requirements are.  

Hard dollar cost comparisons are rather complex, given that these depend on the specification of the solution one opts for. And that’s where @Aerion Technologies can help. We work with you to understand your requirements and then plan how the end goal can be achieved. Get in touch for a Free Consultation asap!
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