Costs Associated with On-Premises Environments
Even if you are not working in the finance department of your organization, you might be curious about the costs that your company typically faces when operating its IT infrastructure in an on-premises environment. Here are some costs associated with on-premises environments that might not be found in a public cloud like AWS:
Hardware costs: Often the largest CapEx costs on premises are for the hardware that must be purchased to power IT. This includes components like servers, networking devices, and security devices.
Building/facilities costs: Buildings are not typically free. Your organization most likely has lease or mortgage costs associated with the buildings and facilities that house your IT infrastructure.
Maintenance: When you are operating on premises with your IT resources, you have to spend money on the ongoing maintenance of the hardware and software. It is not a matter of if something is going to fail but when.
Personnel: Operating on premises requires people in addition to equipment. Your organization must be sure to spend the money required to have the right personnel in the right places for your on-premises data centers and remote locations.
Scalability: Whereas you can easily grow infrastructures in the cloud (often in an automated fashion), you typically need to spend money to grow the infrastructure in an on-premises environment.
Power and energy costs: While you can operate in the cloud under a pay-as-you-go model and have your IT costs operate like an electric bill, when you operate on premises, you need to worry about the actual electric bill. On-premises power costs can be substantial—especially during times of increased utilization.
Redundancy: Once again, the cloud can make high levels of redundancy relatively inexpensive. This is not typically the case when operating on premises. In the on-premises model, you often need to purchase duplicate network and server systems in order to guarantee desired levels of redundancy.
Software licensing: On-premises environments often require licenses for operating systems, virtualization software, and other applications. Licensing costs can add up, especially for larger deployments.
Physical security costs: Ensuring the physical security of on-premises data centers involves additional costs for surveillance, access control systems, and other security measures. You don’t have to worry about any of this when you are in a public cloud.
Insurance: Your organization most likely requires insurance coverage for much of the IT infrastructure when you host it yourself on premises.