Controlling IT Costs Strategies for 2020: Part 2

Controlling IT Costs Strategies for 2020: Part 2

Welcome to Part 2 of our series on how to control your IT costs and tackle a challenging budget in 2020. You can find Part 1 here, and be sure to check back soon for parts 3 and 4.

While many organizations have taken steps to move corporate data to cloud environments, we very often run into companies storing data in aging in-house servers. We also often run into organizations with data hosted on third-party private cloud environments (servers) owned and administered by their Managed IT Service providers and located at 3rd-party data centers.

While these can initially feel like a smart idea with the potential for savings, they almost always end up creating a unique set of costs and risks. Let’s look at those directly.

In-house servers are expensive and risky

For older companies, in-house servers are common. Unfortunately, these are a substantial expense, often causing $10,000s just for the initial cost. Then, you’re responsible for the maintenance of the hardware and software, including repairs and the physical space to house these. You’re protecting against dust and heat while also spending a lot on the equipment and services to protect against data breaches and theft.

At the same time, these solutions typically are located in your existing building. That means they’re vulnerable to local physical threats, from beaches to power outages and natural disasters. Being stuck to a single, physical location makes them more susceptible to data loss in the event of a disaster or emergency.

If you want the built-in connectivity and data redundancy of modern solutions, you’ll need to spend a lot or start moving your data to the cloud.

Hidden costs of third-party private clouds

Private clouds are often touted as the right solution to data management for every company, though the loudest voices often belong to the vendors. While they do provide some efficiency and security gains compared to in-house setups, you still may face high ongoing costs from third-party providers, especially managed IT companies.

These providers make the bulk of their revenue not from hosting your data but from charging a premium for ongoing service and maintenance. Hosting contracts with third-party managed IT providers can also make it challenging and costly to change providers. You generally face a migration fee for every time you shift providers or services. Plus, it can be difficult to get your incumbent managed IT provider to collaborate with the new one. That’s a hassle no IT team wants.

There’s also a growing risk that your small support company may go out of business.

Other concerns include who owns the hardware and if your data is more secure. Managed IT firms sometimes lease their equipment, which means a missed payment on their part could harm your business — plus, they’re charging you a premium to meet their leasing costs. This organization also puts you at risk for data recovery and other dangers.

Just because your data is off-site in a cloud environment, doesn’t mean that the hardware — the specific servers in the data center — can’t crash. They can fail; we’ve seen it. Without proper business continuity and disaster recovery protocols such as adequate backups, you can still lose precious data. The IT provider must put those in place and will pass this cost on to you.

Finally, there’s not always a guarantee of security unless you know what to ask for specifically. While many of these services have increased physical security to limit who can access the data center, their setup itself doesn’t provide built-in virtual security to the servers. Again, that’s in the hands of your IT provider, who may or may not have adequate protocols to control and monitor access to your data.

Public cloud infrastructure providers can be more cost-effective and scalable

Microsoft’s Azure and Amazon Web Services are examples of public clouds, where large companies own and operate resources and provide the service via the Internet. Here, everything is owned by that public cloud company, and they also manage the overall infrastructure. Your data is still kept secure and separate, but much of the physical infrastructure is shared. Think of it like leasing an office in a co-working space, where everyone is paying for a small part of the building instead of the whole thing, spreading out the cost but not mixing businesses themselves.

At the same time, cloud giants are heavily investing their revenues in security solutions. You tend to get access to the latest innovation because these providers can afford to deploy it at scale. They’re spending millions right now on the cybersecurity tools and professionals to look for the next threat as well as monitor you against known risks.

In many cases, you’re also able to use the cloud system for your email, office applications, storage, testing, and other mission-critical elements. That means protection for your entire operations. Built-in enterprise-grade business continuity and disaster recovery capabilities limit most risks to data loss due to a natural disaster, fire, or other physical risks.

What’s even better news for many is that these cloud infrastructures are designed to meet stringent regulatory compliance requirements such as NIST 800-171, HIPAA, GDPR, SOX, ISO, and more. You can find a solution that matches your specific needs.

Cloud systems are almost always a lower-cost solution because you 1) aren’t paying for any hardware or software, and 2) pay for only the service that you use. The pay-as-you-go model limits many fees. If your company has implemented a solution like Microsoft 365 Business, your monthly subscription includes extensive data storage.

One element we prefer is that your cloud storage contract be with the infrastructure provider directly. You work only with Microsoft or Amazon, and their scale generally means low prices as well as only needing to manage one vendor relationship. It can significantly reduce your risk compared to other relationships because it keeps this independent of whoever is managing your IT environment. It also empowers you to get the best of both worlds by hiring a managed IT provider to help set up and manage your cloud environment without having to pay the hefty premiums of the private cloud setup.

Their size also means you will always have room to grow. They can scale with you, limiting business interruptions.

Public clouds are usually what we recommend for our partners and clients. That said, they aren’t right for every single business. What you want to do is look at them in terms of cost savings and access. If you need enterprise-level resources at your disposal but don’t want tight rains on data infrastructure, public cloud systems are likely right for you.

Recap: 3 services to consider

Microsoft Azure, AWS and Google Cloud have overall unique sets of technical strengths which expand beyond this scope of this piece. It’s always a good idea to match your specific needs with recommendations from a professional.

However, for the purposes of this blog, we’ll look at them briefly from a purely data and application hosting standpoint. Here are our thoughts to help you get started:

  1. Microsoft Azure/Microsoft 365 Business: Azure is the leading choice for data hosting by many businesses due to its built-in integration with the rest of the Microsoft 365 Business ecosystem, including productivity and collaboration tools (MS Teams), hosted email and robust data storage. You also get native enterprise-level security plus data and device management, all for a small per-user subscription price. Generally speaking, it’s often best for businesses with preference for Microsoft-based environments.
  2. Amazon Web Services (AWS): From the infrastructure-as-a-service standpoint, AWS is considered the most innovative provider and has developed a very robust cloud computing platform. It has impressive infrastructure security with a wide array of technical services, and it plays better with the open source community. From the data storage perspective, AWS is comparable to Azure, but it’s priced comparatively higher than Azure. Unfortunately, many users consider it confusing.
  3. Google Cloud: While it got a late start in the public cloud game and is still far away from the leaders, Google is a well-funded rival to Microsoft and Amazon and is making strides. It provides very capable data and application storage environments and is great for businesses who prefer G Suite for productivity tools.

There is no service or deployment that’s always best. So, we recommend you work with an IT consultant and cloud experts to determine your needs, your budget, and what service meets those. The savings you find can be immense, so get started today.

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