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Cost Effective Cloud Servers: Part 2 – Small Business IT Solutions Series

As we get deeper into this series we will be talking more and more about how to leverage cloud servers for small business needs. Moving your computing load to the cloud can be cheap, it can also be expensive. In the following article I’ll be talking about:

  • Cloud way of thinking
  • Strategies for reducing cost
  • Cloud vs Physical server cost comparison.

The purpose of this article is to help IT support companies sell ‘the cloud’ to their small and medium sized clients.

If someone asks me what cloud computing is, I try not to get bogged down with definitions. I tell them that, simply put, cloud computing is a better way to run your business.Marc Benioff, CEO of Salesforce.com


It’s important that when thinking about cloud servers that we adopt a cloud way of thinking. You need to shift your mind set from a physical to a virtual way of life. If you don’t adjust your thought process you will never be able to plan and install an efficient and cost effective cloud server.

Cloud do's
  • Run servers only when you need them
  • Regularly upgrade servers
  • Backup to another cloud provider
Cloud don'ts
  • Run Servers 24/7
  • Plan additional space.
  • Store Live / Backup data together.


Servers in the cloud mean you don’t have to commit for specific hardware on a long term basis, you can have what you want, when you want it. When buying hardware you need to think about capacity for years into the future, the same worry doesn’t exist for cloud systems. An upgrade can be completed within 1 reboot cycle, pay for a little breathing room if you need, there’s nothing wrong with having 100 GB of storage free or a couple of GB of memory that never gets used. But make sure you don’t find yourself paying for tomorrows server today.


 Cloud vs Physical server cost comparison. 

This is going to be a ‘rough and ready’ cost comparison of a physical server and a cloud server of similar specifications. I’ll try and include everything that I can but bear in mind that certain costs may get missed.

What do we need to consider for the cloud option?

  • Server Cost
  • Storage Cost
  • Backup Cost
  • License Cost

What do we need to consider for the Physical server?

  • Server cost
  • Storage cost
  • Backup Cost
  • License Cost
  • Warranty Cost
  • UPS Cost
  • AC Cost

We will be comparing a Dell PowerEdge to a Azure D3 Instance (14GB RAM, 4 Core). The Azure server has a Intel Xeon E5-2660. To keep things simple we will stick with 512GB of Diskspace. For the physical server we are going for a middle of the range small business server which will allow for expansion over the next few years. We are going to assume 25 users.

Here’s the dell server:
Dell PowerEdge 430 Tower
Intel Xeon E5-2623 2.6GHz
2 x 600GB  SAS
Server 2016 License
25 x Server 2016 User Cals
3 Year 4 Hour Warranty.

Cost (Excluding Offers) – £6617 – Quote

Here’s the cloud server:
S20 512GB Managed Disk
Running 24 / 7

Cost – £379.38 /Month.

I’m sure you can crunch the numbers but at this point it looks like over a 3 year period a cloud server is £13.6K vs £6.6K. That’s twice as much. But we can keep going. When you have a physical server you need to think about AC, Electricity, UPS. In both cases we need to consider backups.

UPS 1KVA APC – £340.

For the sake of ease lets say we don’t really need AC for a single tower server.

Electricity Cost:
Assuming 750W 24 / 7 / 365
Average cost is 9.5P / KWH – Source

3 Year cost – £1872.45 (Really adds up)

So Far
Cloud – £13.6K
Physical – £8.8K

Still a pretty big cost difference. This brings me onto the final part of this article,

 Strategies for reducing cost 

For me there are two core strategies you should be using to reduce cost with your cloud servers:

  • Run servers only when you need.
  • Tailor performance to demand.

With azure servers you can very easily turn on and off virtual machines according to a schedule. Most servers are really only used during normal working hours, let’s assume in the above example the server is only used from 7am – 7pm each week day. We can literally just turn the server off each night on an automated schedule

This brings out cost per month down from £379 to £145 and therefor our 3 year cost to £5208. If you think you really ‘need’ a server on 24/7 just think about the cost of doing so.

Following on from this vain think about the performance required on each day, lots of servers have peak and non-peak days for performance. If you have a server that runs a huge report once a month and then doesn’t do all that much for the rest of the month consider scaling it down the other days of the month and automating the scaling up in advance of running the report.

Final Tidbit: If you have clients that aren’t willing to pay you to manage stuff like this, don’t charge them for it. Manage the servers, turn them off at weekends and evenings, make sure you schedule everything perfectly. You can reap the rewards of the cheaper azure fees yourself.

If you have any questions or want to get us involved with any upcoming cloud migrations drop me an email – [email protected]