The hidden costs of on-premise software and storage
Our customers often consider various types of Brand Portal solutions and, especially with DAM-focused projects, a locally-hosted solution might seem tempting. Hidden costs, however, are easily overlooked. Here's a list of direct and indirect costs you should consider:
- Hardware costs. This isn't just a couple of servers. Also consider network hardware, loadbalancers, modems, routers, casing, repair and maintenance costs.
- Storage hardware. You'll probably need flexibility in your storage needs, you'll need to buy a setup that is future proof, so you're buying a lot more potential storage than you'll need in the beginning. Sure, you can upgrade HD's along the way, but not infinitely.
- Software. Although our local installs are open-source based, virtualization software, databases and operating systems can quickly add-up. Don't forget monitoring and other third party software tools.
- Internet connection. If your brand portal will be used outside your local network, you could end up facing some pretty heavy traffic loads. To allow good download speeds for your users, you really need the fastest (up)connections speeds available. Hosting a high-traffic solution usually means dedicated fiber lines. Keep in mind, we're talking very large files (much larger than regular webpages), or even videos. You'll need a lot of bandwidth, and a good SLA on the connection.
- Energy and cooling costs. Although often overlooked, be aware of the fact that a room full of servers uses a huge amount of power and generates a huge amount of heat. And you'll need to cool, but then again that takes more energy... This effect is so big, hosting companies actually choose their locations based on local natural cooling and nearby power supplies.
- IT department. Depending on the current load of your IT department running a complete server cluster extra can be too much to handle, so extra employees might need to be hired. You'll also need some sort of back-up team if you need any support. Murphy's law will catch up with you the minute your main IT guys on holiday/get sick/are in meetings/etc...
- Security costs. Periodic security audits might be necessary, depending on your policy. Physically, you'll need a secure server room.
- Monitoring and service. Depending on your reach, you'll probably want at least 99% uptime. This means you'll need external monitoring systems. More importantly, you'll need (emergency) follow-ups on any alarm signals.
- 'Hassle' and opportunity costs. Having your team focus on setting up and maintaining a Brand Portal or digital asset management system will inevitably take focus and energy away from your core business.
- Time to market costs. A local setup will always take a lot more time than a SaaS solution, so the go-live moment might be months away. This might mean you're missing valuable opportunities. Moreover, the costs will already be there, but the systems themselves will not be ready to be used.
- Project costs. Having your team set up the whole system will create a considerable strain on project management.
- Financing costs. Due to the high one-off costs at the beginning (as your project will need to be completely future proof) initial investments will as a rule be incredibly high.
In some specific setups, it might be viable to host your brand portal yourself, mainly depending on scales of economy. However, almost in all of our customers' cases the total cost of ownership of a SaaS solution is a lot lower, the time to market is faster, and overall it's a lot less hassle for you and your IT guys.