ROI Calculations for On-Premise vs Virtualization are shown here by the numbers. This is an apple-to-apples comparison of what this can look like for you. This example is showing a general server with the comparison of a virtualized environment with full price breakdown.
If you are looking for a simpler ROI comparison, click here
Scenario: On-Premise Server Hosting
Costs:
Initial Setup Costs:
- Hardware (servers, storage, networking equipment): $20,000
- Software licenses (server OS, applications, security software): $5,000
- Installation and setup labor: $4,000 Total Initial Setup Costs: $29,000
Annual Operating Costs:
- Maintenance (hardware and software): $3,000
- Power and cooling: $2,000
- IT staff (portion of salary for maintenance): $5,000
- Security updates and backups: $2,000 Total Annual Operating Costs: $12,000
Total 3-Year Cost for On-Premise Server Hosting:
- Initial Setup: $29,000
- 3 Years of Operating Costs: $12,000 x 3 = $36,000 Total Cost for 3 Years: $29,000 + $36,000 = $65,000
Scenario: Cloud-Based Server Hosting (e.g., AWS, Azure, Google Cloud)
Costs:
Subscription Costs:
- Monthly cost for cloud server: $500
- Additional storage and services: $200 Monthly Subscription Cost: $700 Annual Subscription Cost: $700 x 12 = $8,400
Total 3-Year Cost for Cloud-Based Server Hosting:
- 3 Years of Subscription Costs: $8,400 x 3 = $25,200
ROI Calculation:
Savings from Migrating to Cloud-Based Server Hosting:
- Total On-Premise Cost for 3 Years: $65,000
- Total Cloud-Based Cost for 3 Years: $25,200 Total Savings: $65,000 – $25,200 = $39,800
ROI Percentage:
- ROI = (Savings / On-Premise Cost) x 100
- ROI = ($39,800 / $65,000) x 100 ≈ 61.23%
Benefits of Cloud-Based Server Hosting:
- Cost Savings: Significant reduction in upfront and ongoing costs.
- Scalability: Easily scale resources up or down based on demand.
- Accessibility: Access servers and services from anywhere with an internet connection.
- Reliability: Cloud providers offer high availability and uptime, with automatic failover.
- Security: Advanced security features, regular updates, and compliance with industry standards.
Comparison of Email Server and General Server Migration to Cloud
| Aspect | On-Premise Email Server (3-Year Cost) | Cloud Email Server (3-Year Cost) | On-Premise General Server (3-Year Cost) | Cloud General Server (3-Year Cost) |
|---|---|---|---|---|
| Initial Setup Costs | $15,000 | $0 | $29,000 | $0 |
| Annual Operating Costs | $21,000 ($7,000/year) | $7,200 ($2,400/year) | $36,000 ($12,000/year) | $25,200 ($8,400/year) |
| Total 3-Year Cost | $36,000 | $7,200 | $65,000 | $25,200 |
| Total Savings | – | $28,800 | – | $39,800 |
| ROI Percentage | – | 80% | – | 61.23% |
Conclusion:
Both examples show significant savings and a strong ROI when migrating to the cloud. The email server migration has a higher ROI percentage (80%) compared to the general server migration (61.23%), but both scenarios illustrate the financial and operational benefits of moving to a cloud-based solution.