Hidden on-premise costs

The Hidden Costs of On-Premise Software and Where to Find Them

For around a decade now, businesses have been moving their software into cloud-based hosting at an ever increasing rate. This is not only because the affordability and reliability of cloud has significantly improved, but also because it has become far more widely understood that on-premise and internally hosted software has an unprecedented amount of hidden costs attached to it.

The hidden costs of on-premise software range from hardware upkeep and licensing, to the evenings and weekends lost to installing updates and fixing broken infrastructure. However, despite the common understanding of cloud and the benefits it brings, many IT departments still struggle to quantify and demonstrate the time and money lost to the many pitfalls of on-premise software. Thus IT teams remain under-funded, under-resourced, and way behind the cloud adoption curve for far longer than they should be.

Where Are the Biggest Hidden Costs?

Okay, so this will be different from business to business, but there are some trends that we’ve been seeing across our own customer base of over 10K customers.

1.   Hardware and Upkeep

The first biggest cost (and the easiest to get down on paper) is the installation and upkeep of hardware. We’re talking about spending $5-10k on a new server, installing it in a cooled room, keeping the power flowing and setting up a UPS system to protect it from cuts and surges. Everyone in IT knows that this part of the job is expensive. But it doesn’t stop there. When you begin mapping out the hidden costs in more detail, the immediate and upfront costs are just the surface of it all. You will most likely have your backups on separate hardware also and when businesses upgrade software, they also often upgrade the hardware it lives on. Databases and monitoring tools are also often kept on other separate servers, in which case you’d have to add the time and money spent on fixing and maintaining this equipment too. But more about that later!

2.   Software and Licensing

Another huge cost is software and software licensing but not just the licensing of the software itself. Whenever you set up a server to host a specific instance of software (whether it be hardware or virtual), it will have a whole host of other licensed software on it as well. Costs incurred from both licensed and unlicensed software such as databases, monitoring tools, network utilities, anti-virus, and so on, can cost big businesses millions of dollars each year.

Non-compliant licensing can also rack up huge fines from software publishers, not to mention the additional costs of hiring specialist software licensing consultants to help protect businesses from those risks is also very high. Licensing is a mine field of costs! As most IT staff who set up and manage on-premise hardware and applications don’t have a great visibility of licensing availability and cost (as it’s often managed by other areas of the business), expensive mistakes are made quickly and often.

3.   People, Time, and Resources

It is VERY EASY to muddle up day-to-day work, with time wasted on tasks that could easily be shifted to a cloud hosting supplier or SaaS provider. More than this, a lot of the work goes unmeasured or accounted for as it is either instinctive or embedded in routine. For example, how often do you log a ticket in your IT service management (ITSM) tool for the anti-virus updates that you run on servers? Do you log a ticket for the 30 minutes you spend checking that last night’s back-ups ran okay? Never happens, right?

Your time will be made up of a wide range of big, small, planned, and unplanned activities, which all go towards keeping your on-premise software up and running. The small things are the software updates, the security patches, the configuration and permissions changes and the back-up utilities you check each day. The big things are the totally catastrophic hardware failures, where you work till midnight just to get it back up and running; or the security breaches that bring the whole tea to a halt in order to work out ‘how, why, where and when’.

The truth is – software and hardware breaks. Unplanned and unauthorized changes do get made. And your time spent getting it fixed, rolling it back and re-building it from scratch is rarely featured as an additional cost to living life with on-premise software. But it totally should be! Not only that, but the time you don’t get to spend working on those major improvement projects, developing that new service, or spending quality time with that important customer should also be accounted for and seen as a direct benefit of getting software out of your server room and into the cloud. 

To the Cloud!

At SysAid, we’ve invested a great deal into uncovering the difficulties brought about by keeping your ITSM software on-premise. As a result, we’ve developed a set of great cloud-based services and migration tools. We want to make moving from on-premise to the cloud as easy and cost effective as possible.

If you’d like to learn more about the costs involved with on-premise software, please read The 21 Hidden Costs of Having On-Premise Software.

Finally, if you’d like to discuss migration options with our team, just get in touch today and we’ll talk you through everything from backing up your current tool set, to going live with your new cloud-based ITSM solution.

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Posted by Rafi Rainshtein

Rafi Rainshtein
Rafi Rainshtein

VP R&D and DevOps at SysAid, Rafi leads the troops who are responsible for delivering SysAid's products and continuously improving their quality and performance. He’s been programming since the age of six (really!) and can already see his geeky legacy continuing with his three young sons. He used to write comic strips for fun and publish them on his own website before he progressed into the animation field where he got to work with the likes of Elmo, Beavis and Butt-Head, and Lara Croft. Now, with over 20 years’ experience in software development management, Rafi maintains a healthy balance by adding basketball and running into his mix of hobbies.


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