Migrate to Azure or Upgrade Your Outdated On-Premises Server?

Detailed Cost and Benefits Comparison.

Migrate to Azure or Upgrade Your Outdated On-Premises Server?
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This post is essential reading for IT managers, business owners, and decision-makers who are grappling with the choice between upgrading their outdated on-premises servers or migrating to cloud services like Azure. If you’re looking for a detailed analysis of the technical, productivity, and financial benefits, along with a comprehensive cost comparison, this guide will provide you with the crucial insights needed to make an informed decision for your organization’s future infrastructure strategy.

In today’s digital age, businesses are constantly seeking ways to enhance efficiency, productivity, and scalability while optimizing costs. One transformative solution gaining momentum is migrating on-premises Windows servers to the cloud, specifically Azure. This shift offers a myriad of technical, productivity, and financial advantages, propelling businesses into a new era of agility and innovation.


Unlocking Business Potential: Migrating On-Premises Windows Server to Azure

There are numerous benefits to migrating to Azure compared to upgrading your Windows Server:

Technical Advantages:

  1. Scalability: Azure provides unparalleled scalability, allowing businesses to effortlessly scale resources up or down based on demand, ensuring optimal performance without overprovisioning.
  2. Enhanced Security: Azure’s robust security features, including multi-factor authentication, encryption, and threat detection, fortify data protection, mitigating risks associated with on-premises infrastructure.
  3. High Availability: Azure’s global network of data centers ensures high availability and disaster recovery capabilities, minimizing downtime and ensuring business continuity.
  4. Advanced Analytics: Leveraging Azure’s powerful analytics tools, businesses can derive valuable insights from data, driving informed decision-making and gaining a competitive edge.

Productivity Advantages:

  1. Anywhere Access: Azure enables remote access to applications and data from any location and device, fostering collaboration and enabling flexible work arrangements.
  2. Automation: Azure’s automation capabilities streamline routine tasks, freeing up IT resources to focus on strategic initiatives, and accelerating innovation and time-to-market.
  3. Integration: Seamless integration with existing Microsoft tools and services, such as Office 365 and Power Platform, simplifies workflows and enhances productivity across the organization.

 Financial Advantages:

  1. Cost Efficiency: Azure’s pay-as-you-go pricing model eliminates the need for upfront hardware investments and reduces operational costs associated with maintenance and upgrades.
  2. Predictable Costs: With Azure, businesses can accurately forecast IT expenses, avoiding unexpected costs related to hardware failures or capacity constraints.
  3. Optimized Resources: Azure’s resource optimization tools help businesses identify and eliminate underutilized resources, optimizing costs and maximizing ROI.

Cost Analysis And Comparison

When comparing the costs of upgrading and maintaining an in-house server versus migrating to Azure, businesses often find that the latter offers significant cost savings over the long term. While upfront migration costs may vary depending on factors such as data volume and complexity, ongoing operational expenses associated with on-premises infrastructure, such as hardware maintenance, energy consumption, and staffing, can far outweigh the predictable and scalable costs of Azure.

Migrating on-premises Windows servers to Azure presents a compelling opportunity for businesses to modernize their infrastructure, boost productivity, and achieve cost efficiencies. By embracing the cloud, businesses can unlock new levels of agility, innovation, and competitiveness in today’s dynamic business landscape.

One of the key advantages of migrating to Azure is the elimination of periodic renewal costs associated with on-premises servers, which typically require significant investment every 3-7 years for hardware upgrades and software updates. With Azure, businesses benefit from continuous access to the latest software and infrastructure enhancements without additional costs. Bizconnectors Azure’s managed services ensure that your systems are always up-to-date with the newest features, security patches, and performance improvements, allowing your organization to stay competitive and secure without the hassle and expense of frequent hardware and software renewals.

Cost analysis associated with having on-premises Windows servers for Small Businesses

The total average cost of owning and maintaining on-premises Windows servers includes several factors, which can be categorized into capital expenditures (CapEx) and operational expenditures (OpEx). Here’s a breakdown of the main cost components:

Capital Expenditures (CapEx):

  1. Hardware Costs:
    • Servers: The initial purchase cost of servers can range from $3,000 to $20,000 per server, depending on the specifications.
    • Networking Equipment: This includes switches, routers, and cabling, which can add up to $1,000 to $5,000.
    • Storage: Depending on the required storage capacity, costs can range from $1,000 to $10,000.
    • Backup and Recovery Systems: Typically $1,000 to $5,000.
  2. Software Licenses:
    • Windows Server Licenses: Licensing costs for Windows Server can range from $1,000 to $6,000 per server, depending on the edition and number of users.
    • Other Software: Costs for antivirus, monitoring, and other management tools.

Operational Expenditures (OpEx):

  1. Maintenance and Support:
    • Hardware Maintenance: Annual maintenance costs, including parts and labor, can be 10-15% of the initial hardware costs.
    • Software Maintenance: Annual costs for software updates and support, typically 20-25% of the initial licensing costs.
  2. Energy Costs:
    • Power Consumption: Servers and cooling systems can consume significant power. Energy costs can range from $500 to $2,000 per server per year, depending on usage and local electricity rates.
  3. Staffing Costs: IT Personnel: Salaries for IT staff responsible for managing and maintaining the servers. An IT administrator’s average salary can be around $60,000 to $100,000 annually. Alternatively, using Managed Service Providers (MSPs like Bizconnectors) to handle server management can cost from $6,000 to $32,000 per month.
  4. Physical Space:
    • Data Center Costs: If servers are housed in a dedicated data center or server room, costs include real estate, cooling, and security. This can be estimated at $1,000 to $5,000 annually per server rack.

Example on-premises Windows servers calculation:

Let’s calculate the total average cost for maintaining an on-premises server over three years, assuming one server with moderate specifications and typical associated costs:

Initial Hardware and Software Costs: (And upgrading every 3-7 years)

    • Server: $7,000
    • Networking Equipment: $2,500
    • Storage: $5,000
    • Backup Systems: $2,000
    • Windows Server License: $3,000
    • Other Software: $1,000

Total Initial Costs: $20,500

Annual Operational Costs:

    • Hardware Maintenance: $1,500 (assuming 15% of hardware cost)
    • Software Maintenance: $1,000 (assuming 20% of software cost)
    • Power Consumption: $1,500
    • IT Personnel: $80,000 (assuming one full-time staff member managing multiple servers, this cost may be divided by the number of servers managed) or $70,000 for Managed IT services to manage the entire infrastructure, including servers.
    • Data Center Costs: $2,000

Total Annual Operational Costs: $76,000

 Total Cost Over Three Years:

  • Initial Costs: $20,500
  • Operational Costs for 3 Years: $76,000 * 3 = $228,000

Total Cost Over Three Years: $20,500 + $228,000 = $248,500

This example highlights that the total cost associated with maintaining an on-premises Windows server can be significant, with substantial ongoing operational expenses. Keep in mind that hardware and software costs recur every 3-7 years, adding to the overall financial burden. By migrating to Azure, many of these costs can be optimized or eliminated, leading to potential savings and increased financial predictability.


What is the average total cost associated with using Azure?

(Please note that Microsoft’s pricing structure is subject to frequent changes. Nonetheless, we have provided some basic pricing examples below for reference only.)

Calculating the total average cost associated with using Azure involves several factors, including virtual machine costs, storage, data transfer, and additional services such as backup, monitoring, and support. Here’s a detailed breakdown of the typical costs:

1. Virtual Machines (VMs):

Azure offers various VM types and pricing tiers. Let’s consider an example using a moderately-sized VM (e.g., D2s v3) for typical business applications.

  • VM Instance Cost: Approximately $100 per month for a D2s v3 instance.
  • Annual Cost per VM: $100 * 12 = $1,200

2. Storage:

Azure Storage costs can vary based on the type of storage (e.g., Standard or Premium) and the amount of data stored.

  • Standard HDD Storage Cost: Around $0.05 per GB per month.
  • For 1TB (1,000 GB): $0.05 * 1,000 = $50 per month.
  • Annual Cost for 1TB: $50 * 12 = $600

3. Data Transfer:

Data transfer within Azure (intra-region) is typically free, but outbound data transfer costs can apply.

  • Outbound Data Transfer Cost: $0.087 per GB for the first 50 TB per month.
  • For 1TB Outbound per Month: $0.087 * 1,000 = $87 per month.
  • Annual Cost for 1TB Outbound per Month: $87 * 12 = $1,044

4. Managed Azure Services (Essentials): Includes backup, support and monitoring: $1,800 to $12,000 


Example Azure Calculation:

Let’s calculate the total average cost for one year of using Azure, assuming the following configuration:

  • 1 VM (D2s v3 instance)
  • 1TB Storage
  • 1TB Outbound Data Transfer per Month
  • Managed Azure Services (Essentials)
  1. VM Instance Cost: $1,200
  2. Storage Cost: $600
  3. Data Transfer Cost: $1,044
  4. Managed Azure Services (Essentials): $5,000

Total Annual Cost:

$1,200 (VM) + $600 (Storage) + $1,044 (Data Transfer) + $5,000 Managed Azure Services (Essentials) = $7,844

Cost Comparison Summary:

On-Premises Server Cost Over Three Years: $281,500

Azure Cost Over Three Years: $7,844 (Annual Cost) * 3 = $23,532

Which Option Makes Sense for Your Business?

It’s worth mentioning that not all businesses are suited for migration to Azure. Factors such as specific regulatory requirements, legacy application dependencies, and unique infrastructure needs may influence the feasibility of moving to the cloud. Our team is here to help you evaluate your specific situation and determine which solution best fits your requirements, budget, and existing infrastructure. Through a comprehensive assessment, we can identify the optimal approach for your business, ensuring that you make a well-informed decision that aligns with your operational goals and constraints.

The prices presented in these examples are for reference purposes only. The exact pricing will vary based on Microsoft’s current pricing structure, the complexity of your infrastructure, and your specific requirements. To obtain a precise cost estimate tailored to your organization’s needs, we can provide a detailed proposal following a thorough assessment and analysis of your requirements. This personalized approach ensures that all variables are considered, allowing us to deliver a solution that aligns with your business goals and budget.

 Take proactive steps to enhance your organization’s security, scalability, and productivity. By making an informed decision, you can elevate your business to the next level.

Fill out the form on this page or call 866-745-0980 to have a conversation about your options!


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