Moving Businesses to Cloud Complicates IT

by Luke Jones  on Monday, Sep. 30, 2013 12:00 am  

From left: Robert Lindley, president of Innovative Systems Inc. and Ted Clouser, executive vice president of PC Assistance.

Cheaper and easier cloud computing options from big companies like Amazon, Microsoft and Rackspace are making it simpler for businesses to eliminate physical servers, but are complicating the jobs of local information technology firms.

“Cloud computing” is a squishy term: Everyone who has a Gmail account or uses Dropbox stores information in the cloud.

But as the term relates to the world of IT and managed service providers, businesses increasingly are looking to move bulky, space-consuming server infrastructure into purely digital spaces.

Prices can vary wildly by the needs of the consumer, but Herve Roggero, a software developer and blogger, this year illustrated the cost differences between on-site computing and cloud hosting.

Using the same specifications for each setup, he calculated the price of hosting and maintaining two new servers over the course of three years. He posted the results on

Microsoft’s Windows Azure would cost $53,676; Amazon’s service would cost $63,952.

Buying the two servers and licenses to run on-site would cost $132,200.

In short, the cloud is looking better and better.

“Most businesses have at least one, two or three applications that require an on-premise server,” said Robert Lindley, president of Innovative Systems Inc. of Little Rock. “Small businesses often don’t have anything on-site except maybe QuickBooks. It’s easier to make that decision to move to the cloud.”

Lindley said that when Microsoft released Office 365, its cloud-hosted office suite, “Microsoft’s take was that it would impact more of the medium-sized businesses than the small,” Lindley said. “I thought at the time that that was totally wrong. Over time I’ve been proven right. Office 365 is definitely affecting small businesses more than medium-sized ones.”

The net effect, Lindley said, is that smaller IT services firms like ISI need to have more small-business clients to generate the same revenue. When a business chooses to cloud host, ISI doesn’t lose the client entirely, but it does have to deal with an additional party in the client relationship.

“It’s interesting,” he said. “It’s taken some time for that to all shake out. People thought it would mean less business for us. But just because we moved the server to the cloud doesn’t mean less business. We still maintain the relationship.”



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