On-Prem Data Centers or Cloud Hosting?
There’s a change in the air… something is happening to server prices.
Over the last five years, we have had many conversations with clients about moving data to the cloud and what that could look like for their organizations. Historically, the solution that often made the most sense was to have a combination of hosting types: some servers on premise, and some in the cloud. With this hybrid scenario, businesses had more control over their servers, allowing increased agility, flexibility, and ease of management. It’s the best of both on-premise and cloud-based solutions. Unfortunately, this option may no longer be an affordable one.
Because of spikes in AI development and the resulting demand for data storage and processing components, prices for on-premise servers have skyrocketed over the last three years. Some have even tripled over the last three months! Every kind of server is going up in price.
End users have not let this spike go unnoticed. IT managers are reporting significant increases in the cost of server hardware, some going as far as to compare it to highway robbery. Some suggest that this is due to sellers forcing the end consumer market permanently to the cloud, clearing the server market for AI developers to continue expanding.
It takes a lot of CPU power to make AI engines run, and as AI-led development continues to increase, it is only going to put more pressure on the cost and availability of server resources. Because of the processing power requirements of AI, server resources are becoming extremely valuable and much more expensive.
This creates problems when discussing on-premise server options. With the prices for servings being double—or triple—what they were a few years ago, deciding whether to even consider implementing on-premise servers is becoming an outdated strategy.
From a finance perspective, forgoing on-premise servers for an entirely cloud-based infrastructure is a smart move. Cloud hosting significantly reduces the immediate and ongoing cost of server maintenance on the consumer and allows for usage-based pricing that grows with your organization. Considering the growing cost of on-premise servers, it’s likely that cloud hosting will be the only viable option for most businesses moving forward.
Fortunately, having full cloud data storage offers many development opportunities for businesses:
File accessibility anytime, anywhere
Automatic backups
Easy expansions, since costs are so low
A great data storage for start-up businesses
Despite this, it is a dramatic turn of events in a very short period of time. Moving forward, unless you are a large enterprise with a significant data center footprint, the idea of having your own datacenter will just not be economical any longer. On-premise server solutions are going to be DOA. Azure anyone?