Cost Comparison Of A Server Upgrade vs Office 365

by TUCU Managed IT Services in Toronto

comparing IT solutions

Comparing Costs - A Small Business Server Upgrade Or A Switch to Office 365

Today, many small businesses are weighing the options of a new on premise server versus a switch to Microsoft Office 365 in the cloud.

When purchasing new technology, most small business owners are primarily concerned with up front price. In the following post, we compare some costs for a small business server upgrade and Office 365 so that you can make a more informed decision.

Option 1: Server Upgrade

If you decide to upgrade your small business server, be aware that estimates can vary greatly from each vendor, depending on what they include. It’s up to you to decide what you do and do not need. We advise working with an IT service provider to determine your needs, and purchasing from a separate IT equipment vendor to help limit biases in recommendations made to you.
Your initial setup costs will depend on the following:

  • How much data needs to be migrated from your old server to your new one.
  • Your hardware expenses, which includes the physical server, the number of computers you need, as well as any other related equipment such as network switches or uninterrupted power supply units.
  • Your server software, client access licenses (CAL’s), computer software, data backup subscriptions etc.

Optionally, virtual servers and remote desktops can reduce your costs, and may be suitable for you, so be sure to ask about this option.

Ongoing Costs For On Premise Servers

Webopedia explains: “In most cases, a server’s hardware and software costs represent only a small part of the total cost of ownership for a server. In fact, the hardware and software costs typically account for only 15 to 25 percent of the overall costs associated with installing, maintaining, upgrading, and supporting a dedicated server.”

Computer systems must be constantly maintained to function properly. If you have an IT employee, their salary is part of your ongoing IT cost. If you do not have an in-house IT employee, you can rely on predictable maintenance costs and peace of mind with our Managed IT services, which are a fraction of the cost of an IT employee salary.

All things considered, upgrading your server will most likely cost several thousand dollars to purchase and install, with a relatively low monthly cost to maintain equipment and security settings and to support your users.

Option 2: Office 365

Office 365 can be a partial or complete IT solution for some small business. When you subscribe to this cloud-based service, you no longer require an on-premise exchange server for your email or a file server for your documents. Instead, Microsoft handles your email in the cloud, and your documents are stored and shared in the cloud as well. You also get up to date copies of popular business programs such as Microsoft Word, Excel and PowerPoint.

If you are a new business with no data to migrate, your initial Office 365 setup cost will be a low fee per user to simply setup a new account for them and install new software.

If you are an existing business with emails, contacts, calendar items and documents to migrate, the cost will be a little higher to port all the data over.

Ongoing Costs For Office 365

If your needs are simple outside of email and documents, then Office 365 subscription fees may be your total ongoing IT costs (aside from occasional break and fix computer repairs). If you run custom software requiring a server, or have other complex needs outside basic email and documents, then an on premise server may be your better option, but you can also blend the two. We’ve helped several clients reduce on-premise load by moving their email to the cloud, and keeping a light work server for custom software in the office. These are known as hybrid solutions.

Office 365 subscriptions vary in cost and offerings. There are many plans to choose from. Two popular plans with small business users are the Business Essentials plan and the Business Premium plan.

The Business Essentials plan includes online only versions of Word, Excel, and PowerPoint, one terabyte of storage per user, unlimited online meetings, instant messaging, HD video conferencing, and Skype for business for just $6.10 a month, billed annually.

The Business Premium plan includes fully installed versions of Word, Excel, PowerPoint, Publisher, and OneNote on five devices, as well as Office on five tablets and smart phones, for $15.20 a month, billed annually. It also includes the same storage and messaging and meeting services as the Essentials plan.

There are quite a few plans to choose from- these are the two most popular plans for small business.

Hire An IT Consultant

As you can see, this lengthy article provides an overview of costs, however each business has unique needs and there is no single answer that can be put into an article. IT consulting services are an important part of any IT upgrade. In fact, strong IT involvement in a business has been proven to lower costs and risks. Whether you are in need of an upgrade, or just running day-to-day operations, you need a reliable IT professional involved in tech related decisions.

Toronto IT Consulting Services: For SMB and non profit teams in Toronto, call on TUCU.  We have been providing IT solutions and support since 2003.  We are Microsoft Certified Partners and will plan and implement your IT  project from start to finish.  Hundreds of business professionals rely on us, and you can too. Schedule your free consultation today so we can discuss your exact needs and prepare an estimate for you.

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