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Q2 2016 EDITION

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Private Cloud vs. On-premises: A Cost Analysis for Law Firms

Every day, more and more law firms are moving to private cloud solutions. They are doing so for enhanced mobility and increased security and to eliminate the headaches of managing servers and IT. But what about the cost? Will the cloud save them money?

Is a private cloud cost-effective compared to an on-premises environment?

There are many factors involved in answering this question – some tangible, others difficult to quantify. However, with a little number crunching and the right data, it can be done. The biggest factor in the equation is quantifying and tallying the costs associated with maintaining an on-premises system. Some costs occur every few years, others monthly. We'll need to add them all up and determine an annual cost, then compare them to a private cloud solution. This article will walk you through how to properly calculate and compare costs.

Let's get started.

On-premises Costs

Costs for implementing and maintaining an on-premises server and the related IT are sporadic and sometimes hidden. They vary depending on how often you replace your servers, how heavily you utilize outside IT support, and whether or not you take a proactive approach to IT management.

Let's start by defining the useful life of your servers. Traditional IT wisdom says you should replace your servers every three to five years. Use this replacement cycle as your analysis period when calculating the total cost of on-premises (and do the same for a private cloud solution to compare apples to apples).

With that timeframe, you can now identify each cost associated with the server(s) and your firm's greater IT infrastructure. Below is a list of individual costs you are likely to incur over the analysis period – the estimated life of your server.

On-premises Costs: Up-front

Costs incurred each new server cycle (once per analysis period)

Server(s)

Every X years (your analysis period)

Server Software

Microsoft® Windows Server, Exchange Server, and SQL Server®

Server Setup Fee

IT consultant/managed service provider fee to set up your server

Backup Hardware and Software

Onsite backup for your firm's data

Microsoft Office (Retail)

Retail licensing (if you purchase Office software outright)

On-premises Costs: Ongoing

Costs incurred on an ongoing basis, for either a fixed monthly service contract or a time-and-material basis.

Managed IT Services

Proactive server and IT maintenance, monitoring, and support

IT Support

Reactive IT support and break-fix support

Offsite/Online Backup

Offsite or "cloud"-based backup services

Email Service

Hosted Exchange, POP3, IMAP, and/or spam filtering service

Microsoft Office (Subscription)

Subscription-based licensing (Office 365™)

On-premises Costs: Unplanned

Unplanned Repair and Recovery

Unplanned server crashes, repair, and data recovery costs

As you can see, some costs are fixed and predicable, others are wildly unpredictable. In any case, add all of these costs together, based on your historical or projected costs over the analysis period. Next, do the same for a private cloud solution.

Private Cloud Costs

The costs for private cloud should be fixed and predictable. A reputable private cloud provider will deliver all the necessary IT components your firm needs for a fixed fee per user, per month.

A private cloud includes the IT platform, applications, and services your law firm needs ─ nearly everything you would have to purchase and maintain yourself in an on-premises implementation, including:

  • Server infrastructure
  • Hosting for your legal applications
  • Storage for your documents and data
  • Microsoft Office
  • Microsoft Exchange Email
  • Microsoft SQL Server (required by most legal practice management applications)
  • Antivirus/endpoint security
  • Unlimited IT support
  • Managed backups

With your IT and infrastructure provided for a fixed fee, per user, per month, your costs may be less each year and significantly more predictable. To calculate the total cost of a private cloud model for your firm, simply multiply the fixed monthly cost of a private cloud solution by the number of months in the analysis period, then add any setup or onboarding fees quoted by the provider.

The Bottom Line

When you analyze this side-by-side comparison, you're likely to find that a private cloud is either comparable to or less than the total cost of an on-premises environment. (But don't take our word for it: use the On-premises vs. Cloud Calculator to run your own analysis.)

The Intangibles

We have reviewed the financial case for a private cloud solution. But what about the other factors? After all, it’s not just about economics. Here are some additional, important factors to consider when comparing on-premises to a private cloud solution.

Factor

On-premises

Private Cloud

Additional Info

Mobility

Limited

Work anywhere

With a private cloud, you can work anywhere, anytime.

Accessibility

Limited

Use any device

With a private cloud, you can work from any device: PC, Mac, tablet, and more.

Security

Low-medium

Bank-grade

Reputable private cloud providers ensure bank-grade security.

Reliability

Low-medium

Very high

Reputable private cloud solutions include a 99.99% uptime guarantee.

Scalability

Low-medium

Infinite

With a private cloud, your infrastructure scales indefinitely.

Centralization

Fragmented

Centralized

Private clouds are perfect for law firms with multiple branches or working from remote locations.

Do Your Own Analysis

Perform your own analysis, with this On-premises vs. Cloud Calculator.

 

Uptime Legal Systems

Uptime Legal Systems is a leading provider of cloud services to the legal industry. Uptime provides a complete Law Office in the Cloud™ to hundreds of law firms around the world. Services include hosted practice management, cloud-based document & email management, legal-grade email, cloud-based phone service and managed IT for law firms. Click here for more information.

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