The 21 Hidden Costs of Having On-Premise Software

The world has been living with on-premise software for far too long now. The benefits that businesses and IT teams alike are gaining from well-managed, cloud-based services are rapidly changing the face of IT. We’re also becoming far more confident about how the costs of migrating IT service management (ITSM) software to the cloud can be quickly recouped. This cost benefit is elevated even more so when IT departments are able to calculate the true cost of on-premise software. From the cost of physical servers, to the time spent running weekend upgrades… the list of hidden costs to the business is endless.

To help you get thinking about how these costs appear in your own IT environment, here is our arm’s length list of hidden on-premise costs:

Let’s start with a few easy ones…

1. Servers

So your software has to live on a physical server, which you need to buy, keep somewhere, run electricity to, and keep cool. You might even need to give it a polish from time to time.

2. Backups

Your data is only as good as your last backup. The costs attached to managing your own backups, storing data off site, and checking yesterday’s backups for any errors is an additional expense often not accounted for.

3. Anti-Virus Software

Keeping your anti-virus up-to-date is obviously important on all your software and servers. However, the more software you have, the more instances of anti-virus you need.

4. Upgrades

Oh the dreaded upgrades! Managing your own upgrades is one of the most time-consuming activities for IT staff. In addition to the planning, scheduling, and late nights, you also have to account for all the times it fails or breaks and doubles the workload.

5. Patches

Running patches is much like performing an upgrade. However, instead of doing one a month, you have to do about 25! And because they are mostly ad-hoc, managers rarely account for the time you spend doing them.

6. Downtime

Planned or not, downtime caused by on-premise software is bad. The business always notices outages and clings on to the memories they create for way longer than you’d like them to. It also really drags down your SLAs and end-of-month metrics reports.

Okay, now here’s a few you perhaps hadn’t thought of…

7. Testing

How often have you calculated the amount of time you actually spent testing a new patch, release, or upgrade? Not very often, I’m sure! In reality, testing changes to internal hosted software is just something the sysadmin stays up all night doing, but never complains about!

8. When it Breaks

Many IT teams think software ‘breaking’ is just a part of normal life; you log the incident, fix the bug, and bring it back to life. However, the truth is once you’ve got rid of on-premise software, all that time you have to spend fixing it, magically disappears too.

9. Integrations

On-premise software has SO MANY more integration parameters to consider. Tiny configuration changes on servers can totally screw with even the most basic Active Directory integration. Standardized cloud-based software is designed to integrate far more easily and tends to speed up the process significantly.

10. Risk Management

Cloud used to be looked at as a higher risk, but this is really old-fashioned thinking. Far more security breaches and data losses take place on internally hosted and on-premise servers these days. This is mostly due to the fact that IT teams are struggling more and more to keep up with the growing number of potential threats and risks.

11. Scalability

Rarely considered until it’s too late, the ability to scale services can either cost or save a business huge amounts of time and money in the long run. Most on-premise installations are designed and built with the ‘now’ in mind, making scaling up later on very tricky indeed.

12. Storage

Every IT department has that server. The one that sends you an event notification every bloody Monday morning telling you it’s running out of hard disk space! Moving away from on-premise software not only solves this problem, but reduces your overall storage spend.

So here are a few boring ones, but the accountants will like them!

13. Licensing

YAWN… did someone say software licensing? We know software licensing is probably the least sexy part of our jobs, but it’s also a very expensive thing to mess up! When dealing with on-premise, ensuring you’re compliant with software, databases, and virtual machines is a difficult and risky job, which often goes wrong.

14. Over Licensing

Another licensing cost worth mentioning (because loads of people do it) is owning more licenses than you use. Often described as shelfware, over licensing on-premise software now accounts for around 20% (according to Gartner) of the average business’ software licensing spend!

15. Unpredictable Budgets

Most of the points above and below are pretty hard to forecast. The estimated cost of running on-premise software is almost always under-estimated and frequently makes for bad news at the end of the financial year.

16. Assets

Every year the pressure for IT to keep track of its assets grows. From the number of desktops and servers, to the software and licenses you own, as businesses get bigger so does the need to be totally compliant. On-premise software just adds more and more unwanted weight and costs to the asset management and auditing process.

17. Overtime and Emergency Costs

Ever waited in the office till 3am for an urgent server part to be delivered? I have, and it sucks! Not only does this ruin your evening, but the costs attached to either compensating you for your time, calling out specialist engineers or raising high priority incidents with suppliers always comes at a high price.

Don’t worry, this list gets a bit better near the end!

18. Weekends and Evenings

Ditching on-premise software means you no longer have to spend weekends and evenings in the office or sitting in front of the computer running updates, testing, patching, and so on. Just get your software up in the cloud and spend some more time with your friends and family!

19. Continual Service Improvement

Remember that ITIL® book you have on the shelf? There is actually some really good stuff in there about improving your IT services. Many IT teams struggle to have the time to focus on learning how to approach improvement, due to wasting time managing and fixing on-premise software.

20. Relationship Building

A huge focus for many IT teams nowadays is building better relationships with the business. Whether that be with peers in HR and finance, or all the way down to end customers. But frankly, IT teams who are weighted down with too much on-premise and legacy software, simply don’t have the time to do this.

21. It Really Does Take Up 30–40% of Your Costs

We’ve been working the numbers, talking to customers and testing it out and we’ve found that in most organizations, the cost of keeping on-premise software adds around 30–40% to your overall IT costs vs. moving those services to the cloud!

At SysAid, we’ve invested a great deal into uncovering the difficulties brought about by keeping your ITSM software on-premise. As a result, we’ve developed a set of great cloud-based services and migration tools. We want to make moving from on-premise to the cloud as easy and cost effective as possible.

If you’d like to discuss migration options with our team, just get in touch today and we’ll talk you through everything from backing up your current tool set, to going live with your new cloud-based ITSM solution.