Typical Data Center Costs for Small Businesses

Small Businesses Using the CloudWhile cloud adoption once seemed reserved for large enterprises, today’s small businesses are also making the move. Why? For one, it enables them to turn frowned-upon capital expenses (CAPEX) into friendlier operating expenses (OPEX), keeping the balance sheet free from large server purchases in return for a monthly “cost of doing business” expense. After all, the typical lifecycle of a server is about three to five years, which can take a toll on any small business. That’s not the only reason, of course; moving from an on-site infrastructure to a public or virtual private cloud (VPC) provider also helps small businesses compete with others, including industry giants.

Of course, most small businesses wonder if they can afford to migrate to the cloud. The good news is that with a basic understanding of storage costs, and when working with a reputable provider, most small businesses will actually save money.


A Breakdown of Major Data Center Costs



Unless you’re colocating, in which you provide your own hardware but house it within a data center, you’re basically going to be renting servers from your provider. This saves you from having to house and maintain your own servers, but an understanding of your capacity needs is critical. This is because many small businesses opt for consumption-based billing, similar to electric and utility payments; you only pay for what you use each month. Smaller businesses often chose this billing model because it allows them to migrate without a significant up-front investment, but if they don’t have analytics detailing their cloud capacity needs, they may overpay for server usage.

According to Dr. Jonathan Koomey, an IT Consulting Professor at Stanford University, companies are wasting $62 billion per year paying for cloud capacity they don’t need. Many companies have over 80% more server capacity than needed on-premise, and moving this data to a cloud provider means they are paying a third-party for a lot of unused space. So, it’s imperative to understand the capacity you will need, and unload or delete unnecessary data before migration. To avoid all of this, small businesses may opt for a provider offering level billing (more on this later).


Networking Equipment

When working with a data center, ensure that networking equipment—including managed switches and routers that create and control networks—communicate efficiently with one another, and that resources are shared effectively. This helps to reduce downtime, which can cost a small business much more than their monthly data center bill. Downtime dangers when maintaining on-site infrastructure include:

  • Employee Productivity. Downtime can leave employees with nothing to do; in addition to lost productivity, it costs money in terms of the wages or salaries being spent on employees who aren’t able to work.

  • Loss of Business. Many small businesses rely on their website for business and sales. Research shows that 40% of visitors to a website will exit after three seconds of inactivity. For small businesses that often pride themselves on customer service, this can be a make-or-break situation.

  • Damage to Reputation. Downtime can ruin the reputation a small business works so hard to maintain. Not only will it turn off customers in the moment, they may take to social media and spread awareness of poor service to a network of potentially thousands.

  • Loss of Data. Outages causing on-site systems to go down can result in the loss of unsaved data, and can invite cyberattacks and data breaches, making a bad situation even worse.

Power Distribution

Power distribution provides a steady, uninterruptible power supply (UPS) to multiple servers in a rack environment. UPS is a major benefit of working with a cloud provider as it ensures data is available in the event of an outage or natural disaster. Of course, the type(s) of UPS plan chosen will affect cost.

  • Standby UPS. The least expensive UPS type, standby delivers short-term, battery-sourced power during outages through a direct AC connection. It’s most beneficial for protecting data during unexpected power surges. Standby UPS may be referred to as an Offline UPS, a term which differentiates it from completely uninterruptible, online UPS.

  • Backup UPS. Following a blackout or other outage event, backup UPS power kicks in for a short period of time. The switchover happens in milliseconds after failure, so business operations won’t miss a beat. If the system determines the outage may be lengthy, the battery backup provides safe shutdowns so that equipment and data remain protected.

  • Online UPS. Utilizing either a double or delta conversion technology, online UPS is the priciest option. With double conversion, electricity to network equipment doesn’t come directly from an AC outlet, but rather through a rectifier, which takes DC battery power and inverts it back to the AC outlet, fully cleansed. Delta conversion differs by sending power directly back to computers, routers, and other equipment, efficiently skipping processing steps.


Reputable data centers will employ computer-room air conditioning (CRAC) to monitor and maintain the temperature, air distribution, and humidity in a server room, replacing the traditional air-conditioning units that were used in the past, and are still used on-site at many small businesses. While it may just sound like a fancier term for air conditioning, CRAC can actually save small businesses from disaster; according to Industrial Market Trends, mainframes and racks of servers can get as hot as a seven-foot tower of powered toaster ovens, making overheating or an outage highly likely if not properly monitored and maintained. In addition, CRAC systems are customizable for capacity ranges, and can be scaled up or down to meet business needs.

CRAC also manages humidity, and regulates temperature based upon this factor to ensure sensitive data remains protected; this is especially important for high-humidity climates such as those in the South. In addition, CRAC fans adjust to time-of-day; whereas a small business may run normal air conditioning 24/7 to ensure protection during off-hours and weekends, CRAC only operates when it is needed making it more efficient, and a major money-saver.


Ready to Make the Move?

There are a variety of expenses that data centers handle when managing the workloads of their clients; these are just a few of the most prominent. For small businesses working on small budgets, it’s important they review all costs and ask questions to ensure they’re receiving the service they require, at a price that’s right. A reputable provider will be sure to review all costs before entering into any service level agreement (SLA).

If you’re a small business considering a move to the cloud, consider the experts at DSM, Florida’s preferred cloud provider. We’ll work with you to ensure your data is kept safe, and your budget is kept on point. DSM also offers level billing, sometimes called dedicated billing. With level billing, a monthly cost is determined upon initiation of your contract so that there is never a surprise at the end of the month, even if your usage increases. Ready to learn more? Give us a call or drop us a line.

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