Cloud Computing Costs

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I was checking out cloud services a year ago, and pricing them out. The general rule of thumb seemed to be that the up-front costs were lower, but the cost over time was higher. The ongoing costs generally work out to around $60 to $500 per application per user per year.

A typical situation is buying 25 Exchange mailboxes for $5 per month. That's $1,800 per year. That's cheaper than buying a server and Exchange, but not necessarily if you factor in other services running on your hardware.

Typically, you have a local server for accounting. This is because accounting software isn't really cloud-based yet, nor is it likely to in the near future. The software gets hammered harder than email. You need more frequent backups. You want more speed. With a local server, you can guarantee that.

So the appeal of cloud services is balanced off by the cost of buying a bigger server with more CPU and memory, to run a VM with Exchange on it. You can run Exchange in as little at 4 gigs with around 100 gigs of disk. The up-front cost is probably around $500 to $1,000 extra on the server. Double that if you have a 2-node cluster.

Realistically, you can run the old OS and old Exchange server for the life of the server. I've seen installations going strong on 10-year old software. So, that service is basically a commodity.

It's also feasible to downgrade to a simpler server, like qmail, postfix, exim4 or sendmail or some traditional Unix stack. That software costs nothing, changes even more slowly, and scales up even less expensively. (There's a higher labor cost, though.)

In these real-world scenarios, the cloud solution ends up costing more, if you don't include labor costs. Of course, that's why the cloud solutions price out higher - the cloud costs includes the labor costs.