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A Full Guide on Cloud Computing for SMEs - Challenges & Benefits

The utilisation of cloud computing is swiftly escalating among enterprises in Southeast Asia. Experts estimate that the cloud computing sector in Malaysia will surge to a value of US$ 3.7 billion, posting a 13% CAGR by 2024. Meanwhile, Singapore has a highly penetrated public cloud market in the APAC region, expected to grow at 20% CAGR to US$3.5 billion by this year. Singapore is one of the most advanced public cloud markets in the APAC region. Despite the move towards the cloud, the on-premise equipment that remains in use is becoming increasingly vital since it functions as the essential link to access cloud technology.

Problems with Staying On-premises

For most businesses, staying on-premises comes with its own set of challenges. Let’s talk about the cost of staying on-premises:

1. High upfront costs

Setting up and maintaining an on-premises data centre can be very costly. Building an on-premises data centre requires a significant initial investment in hardware, software, networking equipment, and other infrastructure. This includes things like servers, storage devices, cooling systems, backup generators, and more. This is especially true for small and medium-sized businesses that may not have the resources to invest in such infrastructure.

2. Ongoing operational costs

Once the data centre is up and running, there are ongoing expenses to maintain it. These include costs associated with electricity, cooling, maintenance, and repairs.

3. Maintenance costs

Maintenance of on-premises hardware and software can be time-consuming and expensive. Upgrades to hardware and software are also expensive and may require additional resources and technical expertise.

4. Staffing costs

Running a data centre requires a skilled team of IT professionals. Hiring and retaining qualified staff is costly, and turnover can be high in this competitive market.

5. Security costs

Data centre security is crucial to protect against cyber attacks, theft, and other threats. On-premises systems are prone to security threats such as hacking, malware, and data breaches. This puts sensitive business data at risk and to prevent this, businesses need to involve implement physical and digital security measures, such as firewalls, intrusion detection systems, and access controls.

6. Compliance costs

Depending on the industry or type of data being stored, there may be regulatory compliance requirements that must be met. This requires additional resources and costs to implement and maintain.

With all of the above statements, it means that the IT world needs more cost savings on their infrastructure, more velocity and agility for rapid operating, and more elasticity for flexibility on increasing/decreasing resources accordingly to the company's needs and money, all those items fit with the use of Cloud computing solutions which offers those advantages and benefits, but it remains to specify exactly the associated costs with the traditional IT On-Premise Model (will be seen in the following sections) so we will be aware of all the aspects and possible cost gaps before deciding to make any move to the cloud-based solution.

Associated costs with operating an On-premise data centre can be summarised as follows:

There are 4 types of costs to consider when a business deploys on-premises infrastructure:

1. Capital costs

Includes server hardware, server software licensing, network infrastructure, storage and backup infrastructure.

2. Operational costs

Includes server hardware support, software support, network infrastructure support, storage warranty, data centre power and facilities, current system admin labour, IT training and IT staff turnover.

3. Indirect business costs

Includes unplanned downtime, planned downtime and business agility. These are the hardest to measure, but each has a real impact on a company’s financial picture.

4. Other growth costs

While building out and maintaining infrastructure which requires an increase in staff, as per our study, we found that for every dollar spent on capital expenses to upgrade existing data centre infrastructure, companies should also expect to pay roughly $2-$3 for managing, maintaining, and securing that infrastructure.

In summary, on-premises data centres are costly to set up and maintain due to high upfront investments, ongoing operational costs, maintenance costs, staffing costs, security costs, compliance costs, and many other hidden costs. Cloud computing and managed services can provide a more cost-effective alternative for many organizations.

Scalability is Limited If Businesses Choose to Stay On-Premises

Limited scalability is one of the most common problems, especially for small and medium businesses. On-premises systems have limited scalability since the resources available are restricted to what the company has invested in. This means that as the business grows, additional investments in hardware and software are needed to support the increase in demand.

On-premises systems have limited scalability due to several reasons as follows:

1. Hardware limitations

On-premises systems are limited by the amount of hardware that can be used to create the infrastructure. This can limit the amount of storage, processing power, and memory available.

2. Cost

Scaling up an on-premises system can be expensive. This is because additional hardware needs to be purchased, installed, and maintained. The cost of licensing software and hardware can also be a limiting factor.

3. Complexity

Scaling up an on-premises system can be complex. This is because it involves adding new hardware, configuring it correctly, and ensuring that it is properly integrated with the existing infrastructure. This can be particularly challenging for organizations with limited IT resources.

4. Maintenance

Maintaining and updating on-premises systems can require a significant amount of time and resources. This can be particularly challenging as the system grows in size and complexity.

5. Security

As on-premises systems grow in size, they can become more vulnerable to security breaches. This is because the amount of data and the number of users accessing the system increases. This can require additional security measures, which can be costly and complex to implement.

How Does Cloud Migration Help To Solve These Issues?

Cloud migration can help businesses overcome the challenges of on-premises systems and unlock the benefits of cloud computing.

1. Lower upfront costs

Small businesses can save a significant amount of money by using cloud-based services since cloud computing eliminates the need for investing in expensive on-premises infrastructure. They can avoid the upfront cost of purchasing and maintaining expensive hardware and software, and instead pay a monthly subscription fee for the services they need. This also eliminates the cost of hiring IT staff to manage hardware and software. Thus, businesses only pay for what they use, reducing the upfront costs drastically.

2. Increased scalability

Cloud service providers offer resources on-demand and allow small businesses to scale up or down their computing resources based on their changing needs. They can easily add or remove users, storage capacity, and computing power, without disrupting their operations. Additionally, cloud providers have servers in different locations, allowing for geographic scalability.

3. Flexibility

Cloud computing allows employees to access their work files and applications from anywhere, at any time, using any device with an internet connection. This enables small businesses to be more flexible in their operations and work remotely if necessary.

4. Reduced maintenance

Cloud service providers handle maintenance and upgrades, freeing up internal IT resources for more strategic business initiatives.

5. Improved security

Cloud providers offer sophisticated security measures to protect data from cyber threats, including robust security and backup measures to protect their customers' data from cyber-attacks, data loss or damage. Small businesses can also benefit from security updates and patches that are automatically applied to cloud-based services. Additionally, cloud service providers are required to comply with various data security standards and regulations.

6. Competitive advantage

Small businesses can access the same sophisticated tools and applications as larger organizations, giving them a competitive advantage to compete with larger enterprises.

7. Disaster recovery

In the event of a disaster, cloud-based services provide a reliable and secure backup solution. Small businesses can quickly recover their data and restore their services, minimizing downtime and ensuring business continuity.

Migration allows you to use all the critical infrastructure you depend on, while also providing you with more dependable and scalable cloud technologies.

At Axrail, we combine deep AWS expertise with years of Microsoft experience to create integrated Microsoft solutions running on AWS for our customers.

Our AWS-certified team are expert in implementing and migrating Microsoft Workloads, as well as managing the complexities of enterprise migrations from legacy infrastructures.

Axrail also works with businesses to help develop .Net applications on AWS, choosing the best Windows licensing options and integrating networking, security, storage, and system management services on AWS.

Operating on the cloud using a traditionally managed services strategy may prove to be inefficient. That is because the focus is on running and operating rather than designing, architecting and automating your services using cloud capabilities. We use cloud-native features to handle daily operations through automation and continuous security monitoring.

Adopting cloud technology is a journey, one you should really consider your business’s take. Technology is constantly evolving and to remain ahead of the curve and of your competition, you need a solutions partner that can build and tailor digital solutions for you using the latest cloud technologies from DevSecOps, to data analytics to machine learning and more.

At Axrail, we help reduce sales operation costs and customer service costs by 30% for you and increase your sales with a better customer experience. We help to integrate your product catalogue on WhatsApp. From viewing your products to checking out, now your customers can do it all on WhatsApp with Axrail as your trusted chatbot service.

Connect with us to unlock the power of seamless cloud migration and transform your business operations today! Get in touch to learn more about our top-notch cloud migration service at Windows Migration | Axrail and Managed Services | Axrail.


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