25th Mar 2022

Cost-Benefit Analysis: Cloud vs On-Premises Computing

When working with organisations looking to make the jump from on-premises server infrastructure to the cloud, naturally a key component of the discussion is considering cost, when compared to the outgoing solution.

In some cases, past investments, or perhaps lack of past investments, can make visualising the benefits of the cloud challenging, particularly if the existing solution was a single piece of capital expenditure made 5 or more years previously. If that was a single piece of capital expenditure, without widening the net to account for running costs, the total cost of ownership is restricted purely to that one-off payment.

Transitioning from a solution with a perceived operational cost of 0 to per-user, per-month and/or pay-as-you-go models outwardly may be tough to swallow. Is it though? Dig a little deeper and understand what you’re getting and compare that to what you have.

Hidden costs

Your on-premises servers require dedicated space, power, air conditioning, maintenance etc. Much of the costs associated with those requirements won’t necessarily be attributed to IT but can form a big part of your ROI calculation when considering a move to the cloud.

Take power as an example. If your on-premises infrastructure has a steady consumption of around 2000W (remember that your IT infrastructure will be running 24/7), that would equate to roughly 1,460kWh per-month. At a unit price of £0.20 the annual running cost is £3,504. Over 5 years that’s more that £17,000.

Add to that the cost of running an air conditioning unit, also 24/7 to keep it cool. That could cost as much, or more to run that the servers it’s cooling. Now we have close to £35,000 over 5 years, and we’ve only been thinking about power!

You’ll be paying an IT service provider or your own staff to maintain the servers, for which there is a cost either for support or through a salary. If we assume under a managed service contract 5 servers cost £100 per-month each, over 5 years maintenance alone will have cost £30,000.

On top of these headline items will be the costs for software, licenses, backup and more. Some of those may have been one-off costs but others will be subscription products that you wouldn’t need if you were a cloud organisation.

Shared Responsibility

With your on-premises estate, everything is ultimately your responsibility. Uptime, maintenance, security, backup. Each component has a cost and if not properly managed, carries risk. Small environments will have single points of failure too. Be that internet connectivity, physical servers, network switches or firewalls. If one component goes offline, your business is at a standstill. If you don’t have a well-defined disaster recovery or continuity plan, stoppage time could be lengthy. What would that cost you per-hour?

Making the leap to the cloud moves a huge chunk of that responsibility to the provider, who is far better placed to manage the risk as it’s built into the fabric of their solutions:

Cloud | Infinity Group

Enterprise Features

Leading on from shared responsibility, large enterprises spend huge sums of their IT budgets eliminating single points of failure. That starts with adding redundancy in the form of additional servers, firewalls, switches and internet connectivity, but in many cases will result in one or more complete duplicate set of infrastructure.

Smaller businesses rarely have the budget or space to accommodate that kind of resilience but are no less reliant upon functioning IT than any large enterprise.

In the cloud, much of this is taken care of for you, and for the average small or medium business, the redundancy, resilience and reliability go far beyond what could be achieved with an on-premises solution.

Consider email as an example. A typical small or medium business running an on-premises email solution would have 1, perhaps 2 servers underpinning that solution. These will be backed up and may in more advanced cases have replicas elsewhere that can be brought online in the event of failure.

Microsoft 365 by contrast holds email databases in availability groups that are replicated to geographically distant datacentres within a region. Typically this involves 4 database copies in each datacentre, with 4 datacentres in each region. There is some variance to the number of datacentres per-region, but in no instance would less than 8 copies of a database exist. On cost grounds alone, this is well out of reach for small, medium and many large businesses.

Also consider the feature set that’s being made available to you. With the cost of just a license per-user you have access to always up-to-date software and enterprise-grade tools for security and compliance that give you the same capabilities as the biggest organisations that in the past would have to invest significantly to build, maintain and update.


This is just a little snippet into a small piece of what cloud solutions could do for your business. The key message though is that to realise the benefits it’s important to see passed the initial or ongoing costs and consider what the total cost of ownership for your existing solution is, then weigh that up against the added benefits and risk mitigations. Likely you’ll find that you are actually better off making the leap.

Infinity Group are a leading Cloud computing provider in the UK. Get in touch with our IT consultants for assistance with a wide range of cloud services.

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We would love
to hear from you_

Our specialist team of consultants look forward to discussing your requirements in more detail and we have three easy ways to get in touch.

Call us: 03454504600
Complete our contact form
Live chat now: Via the pop up