Cloud vs. Local: 5 Hidden Costs to Consider

Cloud vs. Local: 5 Hidden Costs to Consider

Cloud vs. Local: 5 Hidden Costs to Consider

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Cloud vs. Local: 5 Hidden Costs to Consider

With the cloud revolution well underway, countless businesses around the world are planning to migrate to the cloud in the near future if they haven’t already. Providing outstanding flexibility and scalability, most business owners are already familiar with the benefits of migrating to the cloud, but others end up being sucked in by all the hype. While the benefits of cloud computing are indisputable, it is important to consider the pros and cons of both cloud-based and local systems as well as the various hidden costs concerning both.


Local servers typically need to be kept on around the clock, and the amount of processing power required by many everyday business operations is also increasing. Obviously, these greater requirements lead to higher electricity bills, although most business owners barely take the utility costs of running their hardware into consideration. Most businesses simply take electricity for granted as the invisible commodity that it is.

Although servers and other systems are more energy-efficient than they used to be, today’s multiple-core processors and large RAID arrays draw a lot more power than you might think. Local IT systems can also generate a lot of heat to such an extent that the rooms housing them require constant cooling in order to maximize the lifespan of the hardware. These direct and indirect factors both increase your electrical overhead substantially. In fact, according to the US Energy Information Administration, a single server typically costs around $730 per year to run.

Cloud computing is the clear winner here, since it requires minimal power-consuming on-site resources. You can also hire a remote dedicated server to enjoy the same or better performance than you would with an on-site system.


While cloud computing presents many savings, it also introduces an entirely new problem in the form of bandwidth limitations. If your company doesn’t have enough bandwidth available to it, then your cloud computing options will be limited anyway. However, the additional bandwidth required by more intensive cloud computing tasks can quickly skyrocket to the extent that you’ll need to upgrade your Internet subscription to accommodate the increased traffic. By contrast, in-house servers are limited only by the internal network infrastructure of your company.

Most of the better cloud computing services use a variety of innovative ways to handle bandwidth limitations. For example, Office 365 will download only new emails and ones that you open, and searches are handled on the remote server. While you’ll still have a local cache containing your emails, it isn’t necessary to download the entire database each time you open the program. Nonetheless, when you have an increasing number of users, it becomes harder for such systems to predict your bandwidth requirements and optimize bandwidth consumption.

In-house servers definitely win over cloud computing platforms when it comes to bandwidth. Not only do higher bandwidth requirements demand additional costs – remote connections are always much slower than local ones.


Downtime presents a serious issue for any modern business, since every hour that your servers are unavailable costs money. The cloud gets a great deal of publicity when it comes to downtime, with cases such as the widespread Gmail outage of September, 2013 making headlines around the world. All cloud systems are susceptible to downtime, either due to brief maintenance routines or for reasons beyond the control of the service provider, such as power outages or hardware failures.

santa barbara computer and network security consultingDespite the negative publicity, cloud-based systems experience, on average, significantly less downtime than in-house systems. However, what is most important is how much every hour of downtime costs your business, and this figure will be completely different from one company to the next. Nonetheless, billions of dollars are lost every month due to downtime, so it’s an important consideration for all businesses, particularly larger enterprises. Most cloud-based services guarantee an uptime of at least 99%, which is significantly higher than most local systems.

In spite of the bad press that cloud services sometimes receive, service providers generally offer excellent uptime figures that can easily rival almost any in-house server. After all, they have resources such as global server farms at their disposal.

About the author:

Justin Soenke is a trend-based serial entrepreneur and thought leader in the areas of cyber-security, web design, SEO, social media, eCommerce and managed IT. Justin has overseen the creation and success of over a dozen companies in the technology, security and media sectors, and is the contributing source for his SB Design Blog, SB Tech Blog and SB SEO Blog among regular contributions to many outside blogs and websites, all for our clients.

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