Hidden costs are never a great thing especially in the context of a on-premises business infrastructure.

Infrastructure costs can pile up quickly but what many decision makers don’t realise is that on-premise solutions come with baggage in the form of hidden costs.

For many, on-premise is seen as being a once-off expense for the hardware. Of course, there are costs such as an engineer’s salary and the electricity cost, but that’s usually where many businesses stop thinking about on-prem costs.

This, could be a disaster in the making according to Andrew Cruise, managing director at Routed.

“There are several additional costs to on-premise that should be factored in. These costs mostly have to do with risk. Businesses tend not to take risks into account in their calculations because it’s so difficult to quantify,” says Cruise.

The MD has outlined four hidden costs that tend to creep up on businesses considering an on-prem solution.

Tag team of experts

While many businesses will think that one engineer is enough, what if that engineer were to be away on leave or have an emergency. As such, Cruise advises that companies hire engineers in pairs at a cost of between R50 000 and R100 000 per month.

As a cloud solution provider is maintaining its own infrastructure for its clients, the need for a business to have its own engineer becomes less of a “must have”. That having been said, management of the cloud solution your company uses will require qualified employees so factor that cost into your cloud expenses as well.

Budget bulge

Over the last two years a semi-conductor shortage has through the hardware world into disarray. Prices have started to come down slightly but these last years should provide a teachable moment for organisations.

While having control of your data in the sense that is in your office sounds great, hardware costs get out of hand quickly. As such businesses opting for on-prem solutions – particularly SMEs – tend to build within the constraints of their budget and this can lead to systems that make disasters worse.

“A proper enterprise solution not only means having sufficient storage, power, and processing but having that well into the future as the business evolves. Then there’s disaster recovery that needs to be considered and should ideally be a second site with matching infrastructure. Because such sites can sit idle for years until an emergency, businesses tick the disaster recovery box by keeping old hardware around for this purpose. And then, should it become needed, this hardware can’t do the job. Not being able to provision a sufficiently enterprise-grade environment on your own is a business risk,” explains Cruise.

Speaking of hardware.

Hardware isn’t “the best” forever

The pace at which technology advances means that a system that is blazing fast today could be sluggish and poorly optimised in two years.

Not only will older hardware be slower and require more maintenance, it will likely tend to draw more electricity than newer technology. That’s before we even mention the cost to productivity.

Good cloud service providers will regularly upgrade their systems so that their clients continue to have the best experience possible.

Licenses, warranties and after-sales support

An aspect of on-prem that Cruise brings up took us a back as it was something we hadn’t considered before but it is a notable point.

“Software and hardware warranties and software licencing or subscriptions also need to be considered. Better cloud providers make sure everything is kept under warranty, while businesses often let warranties lapse,” says Cruise.

More so, warranties are vital and keeping track of what is and isn’t under warranty is something that must be kept track of at all times.

“Extended warranties are an important, often necessary, expense,” the MD adds.

While cloud and on-prem solutions have their benefits, it’s important to understand the full picture as well as the costs associated with the solution your business opts for.