Local Server or Cloud?

There is a lot of talk lately about “cloud computing” and moving “Line of Business” applications to the cloud. Simply put this means using a web browser to access your applications hosted on a server somewhere on the Internet. There are several advantages for using cloud computing and many disadvantages. The best analogy I can use is that using cloud services can be like renting a house versus buying one. If you’re in it for the long haul, owning the house might me the way to go. If there is uncertainty about the future, or if a landlord is offering rent cheap – as many cloud providers are – then it might be worth renting for a while. It may make sense to have a hybrid approach. For example use email or spam filtering located in the cloud, but retain accounting and customer data locally.

Advantages of the Cloud

1. No cash up front required to buy a server, applications, and operating system. Only a monthly fee where you “pay for what you use” –often this is per seat (per employee).

2. You and your employees can access the server from any Internet connected location. This can provide a built-in disaster recovery plan because if your office location loses Internet, you can still access the cloud through alternate channels.

3. Software is kept up to date automatically.

4. More predictable IT support costs, no surprise server outages etc.

5. It’s possible to use lower costs dumb terminals locally if no line of business applications that require PCs are needed.

Disadvantages of the Cloud

1. Speed. No matter what the vendor claims, it seems cloud apps are never as fast as local. Possible cost savings will be eaten up by reduced employee productivity that often can’t even be measured.

2. Another big concern involves getting locked into a cloud vendor and having your data held hostage. Moving to another provider might mean significant conversion issues.

3. Spurious shut down. If a monthly bill is overlooked or a clerical error occurs, your entire business can be shut down for days while you straighten it out. This is a particular problem with “big” vendors with automated tech support where it’s hard to reach a human.

4. The reliability of cloud vendors has sometimes been over stated. They often claim 99.9xx % uptime, but in the last two years many high profile companies have had outages including Google and Microsoft.

5. Many people are worried about security and privacy of their data.

6. Cost Savings are often imaginary. What initially seems like a low, low monthly fee really adds up when you multiply it by the number of employees times 36 months. I suggest using 36 to 48 months to make cost comparisons because that’s often quoted as the lifetime of server equipment. For example, if you bought a brand new server with a Windows server OS today, you could expect to use it for the next 3 to 4 years.

7. Free or low cost services often omit critical functionality. The soft cost of having employees not being able to install apps as needed can bleed dollars from the organization.

Advantages of a Local Server

1. You can create order from chaos. By centralizing data on a server, you can better manage business-critical information. Sharing files and other data across PCs becomes much easier, as does migrating data from one PC to another. Older PCs can get new life if their files and data are off-loaded onto a server.

2. You can protect your data by making backups easier. Windows Small Business Server 2011 enables users to protect their data by simplifying backups and the restoration of critical data.

3. You can collaborate better as a business. Not only is data sharing easier with a server-based network, but Windows Small Business Server 2011 comes with Windows SharePoint Services, which is software that enables your employees and other team members to collaborate via the Web. With SharePoint, you get a company intranet with a user-friendly interface to organize and share information.

4. You can accommodate a mobile work force. Servers enable out-of-office workers to have remote access to your network, enabling data sharing among those who travel, telecommute or work off-site.

5. You can share high-speed broadband access. High-speed Internet access across a network from a single ISP account.

6. You can set up new computers, add users and deploy new applications more quickly and easily. Expect to grow? You can better co-ordinate the addition of new PCs amd software. You can also better manage firewalls and monitor threats to your data, and more easily deploy virus protection.

7. You can get more processing power. A server can supercharge your network, storing chunks of data, freeing up memory and enabling PCs to perform better. Small businesses today need that additional processing power to manage Web sites, do e-mail newsletters, and use sophisticated software.

8. You will look more professional — and connect better with your customers. Microsoft Small Business Server enables you to consolidate your e-mail accounts (AOL, Yahoo!, Hotmail, etc.) into a single e-mail account, enhancing your image to customers. A server can make a lot of businesses look bigger than they are.

In conclusion, small start-ups that may need flexibility yet have simple requirements are a good fit for the cloud.  But if have more complex requirements or sensitive customer data or performance needs, keep your server in your closet.


  1. I am a Dell employee and I am quite impressed with your blog that talks about cloud and local server. It’s very nicely written and it puts up both the views in a very analytical way.

  2. Both the use of local servers and the Cloud can be effective in managing IT-related work. It all depends on how a company uses a particular solution and which one is more efficient for it. Many large companies nowadays are using cloud computing simply because handling large resources through the cloud is easy. They don’t have to store the bulk of information in a physical server in the office, which can be costly because it will need additional hardware.

  3. If you are utilizing a Microsoft Small Business Server (SBS) server, then it is most likely already running at it’s limit. Microsoft developed SBS for small businesses, so they would not have to purchase 3 different licenses and 3 different servers to run the essential pieces of software for a small business. The problem is that the software that they bundled together was actually intended to be separated out on their own machines.

  4. It seems that you overestimate local computing when you say:
    “Speed. No matter what the vendor claims, it seems cloud apps are never as fast as local.”
    I’ve seen many applications running faster on the cloud, than their local counterparts.
    Especially ERP’s which are so heavy by design that they tend to kneel the networks.
    Moreover, companies need to rely on the internet when they have multiple branches. Therefore local apps loose this “advantage”.

    In general, I think you are biased towards local servers since most of your arguments are trivial (i.e. more processing power).

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