Posted on November 3, 2024
Backups & DR
Maintaining on-premises IT infrastructure often seems like the most straightforward choice for businesses. After all, having complete control over your servers, data storage, and applications is appealing. However, the true costs of keeping everything in-house go far beyond the initial purchase of hardware and software.
For businesses looking to optimize their budget, reduce complexity, and focus more on growth, switching to managed hosting may be a smarter and more cost-effective decision. Here’s a breakdown of the hidden costs associated with maintaining on-premises IT, and why managed hosting can lead to significant long-term savings.
Data centers consume an immense amount of power to keep servers running efficiently. This isn’t just for the servers themselves—cooling systems are required to maintain optimal temperatures and avoid overheating.
According to a report, data centers account for 1% of the world’s electricity consumption. In 2022, the average cost of energy for U.S. commercial sectors was $0.11/kWh, adding up to thousands annually per business.
By contrast, managed hosting providers have economies of scale, running efficient data centers designed to minimize power usage. They also offer predictive maintenance, ensuring servers run optimally, further reducing power needs.
Hiring and retaining highly skilled IT professionals to maintain on-premises systems is costly. In 2023, the average salary for an IT manager was $151,000 annually, not including benefits like health insurance, 401(k) contributions, and training. Most businesses need a team of IT personnel to cover security, network management, and hardware maintenance, inflating these costs.
Managed hosting shifts this responsibility to experts. Hosting providers employ teams of specialists who handle server maintenance, security updates, and compliance, eliminating the need for businesses to maintain in-house IT departments for routine management tasks.
Hardware is an investment that starts depreciating the moment it is purchased. Businesses that rely on on-premises IT must periodically upgrade servers, storage, and networking equipment to stay competitive.
According to research, hardware upgrades typically occur every 3-5 years, with costs averaging tens of thousands of dollars per cycle. Additionally, unexpected hardware failures can lead to expensive emergency repairs or replacements.
Managed hosting solutions include hardware refreshes as part of their service agreements, ensuring that businesses always have access to up-to-date infrastructure without the high capital expenses of purchasing new equipment.
Cybersecurity threats are increasing, and the cost to protect on-premises infrastructure is rising in tandem. Companies need advanced firewalls, intrusion detection systems, encryption tools, and dedicated personnel to monitor for threats.
Research predicts by 2026, organizations will spend $267 billion annually on cybersecurity solutions. For small to midsize companies, building an in-house security strategy on this scale is often impractical.
Managed hosting providers offer robust, multi-layered security protocols as part of their package, including 24/7 monitoring, regular patch updates, and compliance with the latest regulations, dramatically reducing the need for businesses to invest heavily in their own security measures.
On-premises IT infrastructure is vulnerable to outages from hardware failures, software glitches, or power issues. The average cost of downtime in 2023 is estimated at $5,600 per minute, depending on the industry. For businesses relying on in-house IT, any downtime due to maintenance, updates, or technical failures can lead to significant revenue losses and damage to customer trust.
Managed hosting providers often offer Service Level Agreements (SLAs) with guaranteed uptime of 99.99% or higher. This not only reduces the risk of costly outages but also ensures continuous service availability, allowing businesses to focus on their core operations without worrying about IT failures.
Industries such as finance, healthcare, and e-commerce must adhere to stringent regulations concerning data security, privacy, and reporting. For businesses with on-premises infrastructure, the responsibility for meeting these requirements falls squarely on their shoulders. According to a study, companies spend an average of $3.92 million annually on regulatory compliance and associated activities.
Managed hosting providers, particularly those specializing in certain industries, come with built-in compliance measures, ensuring that your data storage, encryption, and transfer processes adhere to regulations like GDPR, HIPAA, or PCI-DSS without the need for expensive in-house oversight.
As businesses grow, so do their IT needs. Scaling on-premises infrastructure requires significant investments in new hardware, software licenses, and IT staff. This scaling process can be slow and inefficient, often resulting in either over-provisioning or under-provisioning, which can further impact operational costs.
Managed hosting allows businesses to scale quickly and efficiently without the need to invest in additional hardware. Hosting providers can dynamically allocate resources based on real-time needs, offering unmatched flexibility that on-premises setups simply can’t provide.
When comparing the true costs of maintaining on-premises IT infrastructure with managed hosting, it’s clear that managed hosting offers substantial financial benefits. From reducing energy and staffing costs to eliminating hardware refresh expenses and security overhead, managed hosting provides a more predictable and scalable solution for businesses looking to optimize their IT operations.
For businesses that aim to future-proof their IT strategies, managed hosting isn’t just a cost-saving measure—it’s a smart investment that enables growth, security, and operational excellence.
If you are looking to optimize your IT infrastructure while reducing costs? NETdepot provides high-performance managed hosting solutions tailored to meet your business needs. With cutting-edge security, scalability, and 24/7 expert support, NETdepot ensures your infrastructure stays efficient without the hidden costs of maintaining on-premises systems.
Explore the benefits of moving to a more cost-effective, reliable solution today with NETdepot.