On-Premises vs Off-Premises Data Center Cost Analysis

on-premises vs colocation

You have servers, and you’re debating whether to keep them on-premises vs off-premises.

Deciding how and where to house your infrastructure is not something to be taken lightly. For many enterprises, issues with cost, time, and space of system operations crop up, and a decision must be made of whether to keep your servers at your location or move them to a data center.

As industries look to strategize on how to approach the present and future of their physical infrastructure, let’s take a look at some of the costs and benefits between keeping operations in-house or moving to a third party data center.


Record Number of Enterprises Moving Operations Off-Prem

A recent report by INAP showed 9 in 10 organizations will move workloads off premises by 2022. Why is this? Aside from cost, the benefits are enormous:

  • Improved network performance
  • Higher availability
  • Increased application scalability
  • Eliminating compliance issues
  • Expanded infrastructure security
  • Better performance for newly deployed applications

Now let’s get into some cost considerations between internal and external data centers.

On-Premises vs Off-Premises Cost Comparison

CONNECTIVITY COST: The immediate difference between colocation and a small in-house data center is apparent once the network is connected. The serious colocation data centers are carrier-neutral for an always-connected network. Small businesses will have to settle for one carrier, at whatever rate they currently charge. You will need the fastest transfer speeds possible, and some carriers may not even allow excessive bandwidth. For large enterprises, fiber installed to your mini DC can cost on average $10,000 per mile to reach your location.

Your operation likely needs fast transfer speeds and to avoid bandwidth bottlenecks. Depending on your location, a residential-class connection may not be good enough. Some ISPs may restrict you from hosting a web server with too much bandwidth. This could be an ongoing problem because as your company grows, your bandwidth increases with it.

EQUIPMENT COST: Once you get a server rack for your equipment, an Uninterruptible Power Supply fed by backup generators is required for short-term power when the other power source fails. If downtime is a concern, you will need battery backups on everything from your routers to switches.

Climate control is a big part of maintaining servers for redundancy. This will require multiple AC units (not box fans) that are independent and not connected to the main building system in the event of a shutdown. The unit must be a decent amount away from the servers, so that there’s no risk of condensation or leaks.

SECURITY COST: Most businesses’ in-house server security consists of a locked room accessible by few people. While this is a start, multiple layers of physical security is ideal for you and your customers data and information. Depending on your situation, alarm systems, closed circuit cameras, biometric scanners, and on-site security may be needed.

Virtual security is another cost to consider. A firewall is highly recommended to protect your network from incoming attacks. Over 7,000 DDoS attacks occur every day, hurting businesses with hours of downtime and millions of dollars.

For most businesses, it’s doesn’t make economic sense to keep your operations on-premises. Opting for colocation, cloud, or a hybrid of the two will offset these costs significantly.

HostDime’s Orlando colocation facility includes complete redundancy in power, network connectivity, and unparalleled security and safety. If you live or are going to be in the Orlando area and would like to tour our facilities, give us a call. We’re just off I-4, allowing easy access from anywhere in central Florida.

If you have any request whatsoever, please reach out to us and we will gladly unburden you and help with your operations. Let us provide some onboard credit with a free first month of service to help out during these trying times.

We help many enterprises craft a custom, hybrid solution of cloud and colocation to meet their needs affordably. HostDime will also match your initial cloud deposit for the foreseeable future.


Jared Smith is HostDime’s Director of Marketing.