Is Cloud Computing the Future of Small Business Servers?

It hasn’t always been the case that small businesses needed their own servers. But as technology has changed and evolved to become such an integral part of our daily lives, even small businesses with only a handful of employees find themselves either relying extensively on Google Docs or turning to a server.

Google Docs is great until it isn’t, and storage caps may quickly have you and your business turning to other means to have more complete control over your data and the programs you need. Finding an option that combines the data storage benefits of the cloud with additional perks like virtual desktops may be key, but is it cost efficient?

Let’s investigate exactly how we ended up at our current server needs and in-turn, what exactly small businesses need to be successful. 

A Brief History of Server Needs and Prices

The needs of small businesses can be broken down into a few different eras, starting at the conceptualization of servers and ending at modern-day needs. The hosting market has gone through many changes, and understanding the costs and needs of each will help paint a better picture of today’s market.

Dawn of the Server

When businesses first started needing to host their own data, whether that was documents converted from paper or the back-end of an internal email service, or even their own website, servers came to life. To launch a website in 1991 you had to have your own server, and it wasn’t until 1995 that the first web hosting businesses launched.

At this time businesses basically had to host their own servers, and some businesses still do this. Microsoft launched its first Small Business Server software in 2000, creating a way for businesses to manage emails, logins, data, and more.

To host such a server in the present, without any external hosting or support, you’ll need to purchase both a physical server and probably employ an in-house server system administrator. Here are the modern costs:

• Server hardware - $1,500 + $30/month for power, cooling, fire protection, etc.
• Server System Admin - $64,800/year

This brings the total cost of employing a server system admin, buying equipment, and paying monthly costs to about $5,500/month.

Servers Move Online

As mentioned above, it was around 1995 that the first web hosting servers were launched. But companies looking for more than hosting a website needed more storage, more power, and more options. The Windows Small Business Server launched in 2000 but required companies to manage it themselves. If you wanted to remove the need for a server system admin you had to rely on a hosting company to handle your servers for you.

This brought about a few types of services about: colocation, dedicated servers, managed servers, and web hosting. Using modern prices for these services, you can expect to pay:

• $2+/month for web hosting - this is basically just a place to store your webpage
• $38+/month for managed servers - this removes the need for a dedicated server system admin
• $45+/month for dedicated servers - more freedom than managed servers, but you are responsible for everything
• $132+/month for colocation - this lets you store your own servers at a warehouse where they are protected, but you’ll still have to pay for electricity and a server system admin

Small businesses looking at this option should be aware that this is typically only for servers, not any additional programs or cloud computing software. You’ll have to load your own software onto the servers, and if you want something simple like Microsoft Office or Quickbooks available to all employees you’ll need the appropriate licenses.

Servers become Virtual

VMware first launched its software in 1999, creating a new type of computing that benefited both consumers and businesses alike. No longer did you need a computer at every desk, instead you just needed a monitor attached to the network, with all of the programs and operating systems existing on a server.

It wasn’t long until other companies started getting in on this business, realizing that small businesses and offices didn’t want to have to operate and maintain hundreds of machines when they could use virtual instances instead.

Apps4Rent launched shortly after VMware, in 2002, and helped many businesses virtualize their offices onto servers.

• This method is still used heavily today, and prices are very diverse across the board. For very basic virtualization, businesses can expect these prices for very basic services:
  
  $3+/machine per month - this will allow an employee to do basic tasks on the software you provide
• $25+/machine per month - this will be a dedicated machine that exists virtually, the benefit being you never have to upgrade/repair it
  

But the industry had no reason to stop there. Virtualization was the perfect way to allow small businesses to have as much computing power as they need, only when they need it. By combining cloud computing with virtual servers and web hosting small businesses can save both time and money.

We are finally entering a time when cloud computing is on its way to replacing physical servers, especially those needed by small businesses.

Google trend data from 2004 - present comparing “Web hosting service” and “Cloud computing”

What Do Small Businesses Really Need?

It is easy to get oversold, especially when it comes to areas of expertise people are not often familiar with. Do you need 2, 12, or 100gbs of RAM? Is 1 quad-core CPU better than 2 duo core CPUs? Do I need the speed or an SSD for my server, or would a larger HDD be a better choice?

Small businesses need specific things, including:

• A website (preferably that they don’t have to host)
• A diverse collection of software (SharePoint, Office 365, QuickBooks, Project Server & Exchange, Azure, a Virtual Desktop, etc)
• A stress-free way to manage their servers, emails, data, and the entire backend
• Someone to fix problems that pop up, preferably someone that isn’t on payroll

Small businesses also need to mind their bottom line a bit more than larger businesses with a bit more budget leeway. Let’s compare the many ways they can launch their office off the ground floor and into the cloud.

Crunching the Numbers - Small Businesses On the Cloud

There are a few different paths to pick from for small businesses looking to move their server needs out of the physical realm and into the cloud. Aside from the obvious benefits of speed and global access, virtual servers have the added perk of being backed up on many different storage devices making them far less prone to memory or data failure errors.

Here are two companies compared, one that offers physical servers and hosting and the other that does everything virtually.

Apps4rent.com

• Is a virtual server that allows you to easily upgrade and downgrade depending on your needs
• Everything is managed by a professional team, no need to hire a server system admin for $65k/year
• Allows for the integration of business software, such as QuickBooks and Microsoft Office 365
• Is an Intuit authorized QuickBooks hosting provider offering cloud services at lowest pricing
• Is a Tier 1 CSP for Office 365 and major Office 365 migration service provider
• Virtual desktops can be added/subtracted on a per-need basis, so upgrading or downsizing your staff doesn’t come with the added cost of unused computers
• Integrates with Microsoft Azure for a seamless cloud computing experience

Hetzner.com

• Operates physical servers that you can rent or co-locate at, depending on your needs
• If you decide to use a dedicated server or co-locate you’ll need to manage servers yourself, possibly by hiring a server system admin
• Doesn’t integrate easily with virtual desktops or software, you’ll have to create everything yourself (or rely on your server system admin to do so)
• Provides domain and hosting support for your website with varying levels of pricing depending on your needs

For a business looking to host a server, create and access 5 virtual desktops with access to QuickBooks and Microsoft Office 365, and have someone else manage everything for them here are the costs for each option, per month and year (numbers are rounded estimates):

Hetzner.com

• Dedicated servers - $40/month
• Software licenses (Microsoft Office, QuickBooks) - $70/month
• Server System Admin staff member cost - $5,400/month
• Total cost = $5,510 per month
  

Apps4rent.com

• 5 dedicated virtual desktops with 24/7 support - $125/month
• Software licenses (Microsoft Office, QuickBooks) - $70/month
• Azure support - $30/month
• Total cost = $225 per month for basic service

Small businesses don’t have the time or resources to waste on troubleshooting problems, and when an email server goes down that is money down the drain for every minute until it is fixed.

For businesses that have resident tech experts, they will definitely want to go the route of paying for a dedicated server and allowing the server system admin to handle creating virtual desktops, software licenses, data storage and migration, and everything else that comes with this method.

For everyone else, the easier and cheaper option will almost always be cloud hosting.

There is no reason to pay for things you aren’t using, especially in a world where computer time is so easily tracked. That is why many businesses prefer desktop as a service that helps to optimize their budget easily without spending too much on infrastructure.

This is also particularly the reason for the plans that offer per-use fees are so valuable for small businesses trying to save money and optimize their budget.

Cloud computing and cloud hosting are definitely becoming more popular with each new advancement in technology, and in the modern workplace, virtual desktops are indiscernible from their physical computer counterparts.

There is no need for everyone to have a computer, anymore, and small businesses should absolutely take advantage of cloud hosting to help improve their bottom line.

The author is not associated with any of the projects mentioned.