The choice between self-hosted and cloud hosted is usually settled by four facts about the system in question: when its hardware is due for replacement, who looks after it today, where the people using it sit, and what your software licences allow. If the server is near the end of its life and nobody on the payroll wants to look after another one, hosting the system elsewhere is normally the better answer. If the server is recent, the workload is steady and the system has to sit next to equipment on site, keeping it is a perfectly reasonable decision.
This article is a way of making that decision for one system. For the general arguments on each side, see the pros and cons of moving your business to the cloud.
The options are wider than two
“Self-hosted” means you own the server. It may be in your office, or in a rack you rent in a data centre (often called colocation). “Cloud hosted” is used loosely for two different things: a server rented from a hosting company for a fixed monthly fee, and a cloud platform such as Microsoft Azure or Amazon Web Services (AWS), where you pay for what is switched on and can change it at will.
| Your own server | Server rented from a hosting company | Cloud platform | |
|---|---|---|---|
| Who owns the hardware | You | The hosting company | The provider |
| Who replaces a failed part | You or your IT support company | The hosting company, under its contract | The provider, usually without you noticing |
| How you pay | A purchase every few years, plus running costs | A fixed monthly fee, often with a minimum term | Monthly, according to what is running |
| Changing capacity | Buy and fit parts | Order an upgrade | Change a setting |
| Operating system and database updates | You | You, unless the contract includes them | You on a virtual server, the provider on a managed service |
| If the office loses power or internet | The system is down, if the server is in the office | The system runs, but the office cannot reach it | The system runs, but the office cannot reach it |
Start with the dates
Three dates frame the decision.
The first is the age of the hardware. A server is normally budgeted to last around five years, and once the manufacturer’s warranty has run out a failed part can mean days of waiting.
The second is the support date of the operating system and the database. Windows Server 2016 stops receiving security fixes on 12 January 2027 and SQL Server 2017 on 12 October 2027. Whichever way you go, an out-of-support version has to be replaced, so the upgrade work is common to every option and should not be counted against only one of them. Our end-of-support check gives the dates for the versions you run.
The third is the renewal date of any hosting contract. Hosting companies retire old platforms and change their prices, and a renewal notice is often what starts this conversation.
If none of the dates falls within the next eighteen months, there is rarely a reason to hurry.
When keeping your own server is the right answer
- The system controls or collects data from equipment on site and needs to be on the same network.
- It is a desktop application that talks constantly to a database on the local network, and everyone who uses it works in the same building.
- The office has one internet line that cannot be improved or duplicated.
- The hardware is recent, the load is steady, and there is a competent person available to look after the server, with someone to cover when that person is away.
- The software’s licence, or a hardware key plugged into the server, ties it to a physical machine.
Self-hosting is only a sound choice if the unglamorous jobs are really being done. That means backups copied off site and restored as a test from time to time, security updates applied to a schedule, a battery backup that has been tested, and a written plan for what happens when the server fails on a Friday afternoon. If those jobs depend on one person remembering, the saving over hosting is smaller than it looks. A maintenance arrangement can cover the software side of that list, but somebody still has to own the hardware.
When hosting it elsewhere is the right answer
- The hardware is due for replacement and nobody wants to specify, buy and install another server.
- People use the system from several sites or from home, so the office line has become a bottleneck for all of them.
- Everything runs on a single server with no fallback, and a day without the system would be expensive.
- Backups rely on someone swapping a drive.
- Demand varies through the year, or the business is growing and nobody can say how big the server needs to be in three years.
- An office move is planned and the server would have to move with it.
Between the two hosted options, a rented server is the simpler arrangement: one fixed fee and little to configure. Its weakness is that you inherit the hosting company’s hardware cycle, and you are still responsible for the operating system unless the contract says otherwise. A cloud platform gives you more control and better resilience, at the price of more to set up and a bill that needs watching. If you settle on a cloud platform, AWS vs Azure covers the choice between the two largest.
Compare the cost over five years
A monthly cloud bill set against the purchase price of a server is not a fair comparison. Put both on the same footing by adding up five years of each.
For your own server, count:
- the hardware, its warranty and its eventual replacement;
- Windows Server and SQL Server licences;
- backup software and off-site backup storage;
- power, cooling and the battery backup;
- the time your staff or IT support company spend on updates, monitoring and repairs;
- a realistic allowance for lost working time when the single server fails.
For hosting, count:
- the monthly charges for servers, storage and backups, sized from measurements of how busy the current server is and not from its specification;
- licences, which are either included in the hourly rate or brought with you where the provider’s terms allow;
- the one-off cost of the move itself;
- a second internet line for the office, if you do not already have one;
- the time spent managing the hosted environment, which is less than for a server you own but is not zero.
The two totals are often closer than either side’s advocates suggest. When they are close, let the non-financial facts decide: the risk carried by a single ageing machine, and who will be around to look after it. A purchase and a monthly charge are also treated differently in your accounts, so ask your accountant how each would affect them.
A middle route
The decision does not have to be all or nothing. The application and database can move while a piece that must stay on site, such as a link to a machine on the factory floor, stays where it is and connects over an encrypted link (a VPN). A business that keeps its own server can still send backups to cloud storage, which removes the weakest part of most self-hosted set-ups at modest cost.
Questions to settle before asking for quotes
- Which of the three dates is closest, and how long does that give you?
- Who looks after the server now, and what happens when that person leaves or retires?
- Where are the users, and does anything on site need to be physically close to the system?
- Which licences do you own, and can they be used with a hosting provider?
- How long could the business manage without the system, and how long would a restore take today?
With those answered, any supplier can give you a comparable quote. Our cloud migration service page describes how a move is rehearsed and costed, and how the cloud can improve your business describes what changes day to day afterwards.