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The True Cost: On-Premise Solutions Versus Cloud Solutions

Posted by Shawn O'Brien on Oct 26, 2016

It's typically more expensive to house a bunch of severs on site than it is to use the cloud.
It's typically more expensive to house a bunch of severs on site than it is to use the cloud.

If you're thinking about transitioning your data from on-premise hardware to the cloud, you're not alone. Many companies are turning to the cloud to support their business operations. For example, in a survey of 930 IT professionals conducted by RightScale, 82% use a hybrid cloud strategy - a 10% increase from 2014.


Businesses aren't just using the cloud to increase workplace efficiency and flexibility, they're also using it to protect their most critical asset: data.


"The cloud can be 30% less expensive than on-premise solutions."

These statistics, however, pose the question: Are companies turning to the cloud not only because it increases efficiency, productivity, flexibility, and IT security, but also because it's less expensive to accomplish these feats than when using on-premise solutions?


The answer is yes, but let's discuss this in more detail.

First and foremost, we need to set the scene. After all, costs are truly company-dependent, so you need to understand that what we're about to describe may or may not apply directly to your company or industry. However, what it will provide is a general idea about whether the cloud can save companies money.


Greg Deckler, Solutions Director of cloud services for Fusion Alliance, perfectly broke down the costs of on-premise and cloud systems.


The most common mistake people make when comparing cloud to on premise IT security costs is they forget to calculate the people component of managing an on premise infrastructure. Once those expenses are added into the mix it's clear to see how much less expensive having a cloud infrastructure is. Look at the following example.


To first understand the costs of a single on-premise solution, Deckler thought about the space a single server might reside in, and its power consumption and hardware costs. His calculations came to roughly $164 a month. With the cloud, expenses rose to about $200 a month.


However, he added these simple scenarios are unlikely to happen because many companies have multiple servers on site. So, he described a case where an on-premise solution with a 42U rack unit would cost companies roughly $3,635 per month. With the cloud, costs rose to nearly $8,500 per month.


Deckler then explained how even this scenario is also unlikely because many companies would struggle to run all of these servers on site. When the costs of maintaining an IT team is taken into account - based on Deckler's equations - the cloud becomes 30% less expensive than on-premise solutions.


Of course, companies need to consider other non-hardware or software factors that can increase or decrease costs. These may include:

  • Cost to maintain a full IT team: The medium annual wage for computer and IT positions in the U.S. was just over $81,000 a year in 2015, according to the Bureau of Labor Statistics.
  • Usage: With the cloud you only pay for what you use. But with on-premise solutions you're usually paying a set fee no matter how much space you take advantage of.
  • Easy upload and installation: Tom Gillis, a contributing writer for Forbes and a former General Manager at Cisco, described a scenario where him and his team wanted to alter certain appliances into cloud services. However, he had to wait for developers to construct a data center to complete his project. Gillis noted that if he had the ability to deploy his software on the public cloud, he would have done so. The same concept applies to using non-public clouds: Companies save on installation and uploading costs.

As we previously noted, costs depend on the specific situation, company and industry. However, what this information does provide you is with an answer: The cloud will help you save money.

How You Can Gain Peace of Mind

EiQ offers two SOCVue® hybrid security-as-a-service solutions that can help organizations of any size affordably and effectively improve their cybersecurity and compliance posture:

  • SOCVue Security Monitoring gives you visibility and control over your IT environment. You’ll get best-of-breed Log Management and SIEM that is managed around-the-clock for real-time threat detection, analysis and notification, proactive remediation guidance, and compliance auditing.
  • SOCVue Vulnerability Management reduces your attack surface and mitigates risk with unlimited managed scans, analysis, risk prioritization, and remediation guidance. Focus on what matters most: your core business.

EiQ’s SOCVue combine the best people, process, and technology to build the enterprise-class IT security program your organization needs. That’s because SOCVue gives you the flexibility and cost savings of a security software-as-a-service offering, but also provides a world-class team of security and technology experts to manage the technology and help implement cybersecurity best practices.


With all the challenges you face today while trying to keep your organization safe, having the best IT security solutions in your corner should not be one of them. Request a demo today to see how quickly and affordably you can improve your security and compliance posture with EiQ.


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Tags: Cloud Security

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