Small server vs cloud: which is best for SMBs?

If, like me, you see no shame in your technical expertise, the style and pitch of some of the cloud sales initiatives presented to small businesses can grate rather painfully on your self-worth.

This has been almost unavoidable while the hardware industry has been bashing out servers best suited to being walled up in an air-conditioned room; you definitely don’t want the grief of maintaining several kilowatts of air con and a stack of batteries because your servers are chunky enough to crush unwary body parts the minute you touch them.

But even five years ago, when cloud started to look like a credible delivery platform, that picture wasn’t wholly accurate. Today, it’s even less so: the smallest servers can deliver sensible resources for small businesses for less than £200, and such devices take up less shelf space and electricity than the sachet-gobbling coffee machines found in MDs’ meeting rooms.

The smallest servers can deliver sensible resources for small businesses for less than £200

So, how should your small business decide whether to invest in its own server or go down the hosted route? What advantages does each offer, and will you pay over the long term for cloud services as your headcount and data storage demands rise? While every business is different, I hope to answer these questions in this feature.

The case for servers

Let’s think back for a second and consider the performance you could buy at the start of the cloud era. The HP ProLiant DL380 G5 was pretty close to de facto standard, and came in with a dual-core Intel Xeon at 2.33GHz and a fair-to-reasonable disk subsystem for around £6,000. It was a rack-mount, and it didn’t like being exposed to the heat of an English summer day; its fans would stir up a racket and, overall, take 600-800W of power to run.

Nonetheless, the DL380 was a sales winner, although it was rarely filled to its theoretical maximum capacity of RAM, disk and CPU. Unusually for HP’s server range at that time, there was no direct crossover to a deskside unit – other, less popular parts of the catalogue could be converted from rack to deskside by swapping a few panels and clip-on wheels.

However, the monster thus created would quickly drive the unfortunates expected to sit in the same room completely bananas. Phone calls would be strained, and concentration would suffer. (I know, since I’d often set up a new DL380 by first running it out on a desk in an IT team room; this would be grounds for strong words if it went on for more than a few hours.)

Contrast that with the recent presentation of the Dell PowerEdge VRTX (pronounced “vertex”) at Tech Camp in Paris, in a gold and beige rococo salon, with birds tweeting in the trees outside the open window. Only at the end did the presenter, who had been speaking unamplified, mention that the VRTX (fully populated with four blades, each offering five times the capacity of a DL380) had been left powered up throughout his presentation.

Software changes

Then there’s the software. Back in 2005, we were bashing away at Windows Server 2003, and only just beginning to understand the 64-bit version. Updates could take you out of action, infections were far from unknown, and many practices and superstitions left over from Windows NT 4 days still dominated management thinking. Complete machine restores from tape in a single-server network were, understandably, the stuff of nightmares.

Today, the proposition is very different. Software developers have had an enormous break from the pressures of quarterly financial results in the shape of an immense recession, when no amount of sexy features would tempt buyers out of their torpor.

This has shown – whether you consider the breakthroughs in Windows Server 2012 or the leaps forward in usability made by the OpenBSD or Ubuntu distributions – that giving a software person a chance to sit and think can allow them to sort out user problems that previously seemed insuperable fixtures of daily life.

Advances in usability allow people with reasonable, non-wizard levels of experience in small-business networking to make direct use of the most improbable hardware resources as servers. I exhumed a stack of HP dx5150 workstation PCs at a client, fed them some RAM and several disks each (the dx5150 is especially good at running several disks) and used them – along with Server 2003 64-bit – to put up a fast-moving, reliable and flexible deployment of the 3CX VoIP phone system.

Modern SATA disks and a system design that didn’t put all the business’ eggs in one server basket delivered a rollout that, if done with heavy iron, would easily have strayed into the £20,000 range for a system limited mostly to software licences and a quick blast through Scan’s parts-ordering system.

High quality at low cost

That said, there’s no need for dumpster-diving. New machines offer much more environmentally friendly power consumption, combined with levels of performance – during the rare phases when they’re at full stretch – that go against some of the hard-won experience I was praising only a paragraph ago.

There’s a cliché that says, “look no further than…”, which I was going to deploy to get you to research HP’s ProLiant MicroServer, but that would be trite, and the point is actually the reverse – you should go much further in understanding what’s on sale in the modern era. Did you know that Fujitsu makes a four-drive SAS disk architecture Xeon server in a small-form-factor case – the Primergy TX120?

You can’t completely escape the kind of pricing and customer abuse that opened up the market for cloud in the first place

Alternatively, have a Google for enthusiastic HP ProLiant MicroServer users. There are people out there running VMware on it (including me), others running fat Linux web servers, while others still (again, including me) are cramming ex-enterprise-grade RAID cards in the things to bump up the disk performance.

Depending on the discounts available, the basic MicroServer hits the street for around £160 exc VAT, and the next set of machines, just a little up the price chart, may be sold with pitiful amounts of RAM and a gesture towards a small-business-server OS – but don’t be fooled.

Of course, you can’t completely escape the kind of pricing and customer abuse that opened up the market for cloud in the first place. Almost all small-business systems are sold with as little disk space as possible, and ludicrously small amounts of memory, to keep the headline prices low in a segment that’s traditionally considered tight-fisted.

This means you have to work to match up good sources of those parts, but as I’ve already said, this option is best suited to those who don’t subscribe to the fear-and-superstition model of computing.

The case for cloud

Let’s start with the obvious benefits of the cloud: unlike when buying a server, you aren’t hit with an upfront cost; there are no hidden electricity costs; there’s no need for a noisy, dedicated server room if your needs go beyond the machines I mentioned above; the administration is reduced (after all, you’re effectively outsourcing much of the expertise to your chosen cloud supplier); and it’s flexibile.
The flexibility boon deserves more focus.

Do you want to fire up a quick project? Spin up a VM in the cloud for an hour/a day/a month, then close it when you’re done. Or say your business expands its staff in the lead up to Christmas: with cloud, you upweight your demands during that period, then simply pull it back when 25 December ticks around.

Certainly, the process of cloud adoption looks like a no-brainer for almost anyone engaged in starting a small business. There’s no need to sell your wife to Robert Redford to drum up the cash to buy all your email software, PCs and switches before you can turn a wheel: just get started with a few groats a week to your friendly web host.

And it really can be only a few groats.

I ran through a startup scenario such as this with OVH recently and came away considerably surprised. Constructing a comparison between its costs and those of a modern small server over three years for a five-person business is both straightforward and incredible: we’re back to the MD’s coffee machine again, only this time in cost terms, not space or power consumption.

Less than £15 per month would give those five employees a collective 250GB of storage space in five email accounts.

It would be foolish to think that an example such as this represents the be-all and end-all of cloud for small business, but it’s surprising how many start-ups act as if one supplier and one service is all it takes: in reality, using more than one service – and more than one type of service – should lead naturally to using more than one supplier.

This is something that used to be a serious issue for old-school server techies, since it involves all manner of deep difficulties concerning “compatibility”.

However, that’s old thinking. There’s effectively no compatibility barrier to using a host such as OVH for managed “branded” email, Outlook.com for unbranded failover, Xero for your accounting and ICUK.net for your domain management, for example. Indeed, giving everything your business requires to only one supplier under a contract that allows prices to vary isn’t a good long-term decision.

Giving everything your business requires to only one supplier under a contract that allows prices to vary isn’t a good long-term decision

It’s far easier to spread the load in a cloud world than it is with a classic small-business server. That said, there are a lot of mousetrap-style offers out there: you need to go through what big businesses call due diligence, and what most small-business owners tend to call “not being taken for a mug”.

Aorta and Nirvanix

To see how easy it is to be caught out once you put all your eggs in one basket, consider the case of Aorta Cloud and Nirvanix. Nirvanix gave its customers only two weeks to migrate their data from its systems when they went into administration – the nightmare scenario for anyone wholly dependent on one supplier.

It should be noted that Aorta came up with a rescue package that eventually resolved most of the problems, but I’m sure the irony of the name Aorta – a blood vessel that kills you in an instant if it fails – wasn’t lost on the company.

No sales pitch in this field includes statements such as, “Of course, when we hit a funding problem, your exit strategy looks like this”, although there are some admirable and rational suppliers out there – Sage, for example, makes it absolutely crystal clear that it’s your responsibility to back up your data.

Mobility between providers is supposed to be a key advantage, too. If you believe that you’re getting poor performance, it’s theoretically straightforward to move to someone making better promises. Of course, it’s also inevitable that cloud contracts try to make this as difficult as possible.

The key thing to look out for in a cloud contract at a significant size is any reference to an anniversary-date clause: this is the concept that you can cancel on only one day per year, namely the anniversary of the inception date. Clearly, this is more advantageous to the supplier than the consumer.

Conclusion

Perhaps the most corrosive and time-wasting idea of all is the one that claims the server versus cloud debate is an either-or, black-and-white decision.

Microsoft certainly sides with me, saying that everything it does is designed for hybrid operation, indifferent to local or remote, physical or virtual, central or distributed operation.

It makes perfect sense to have at least a peppercorn cloud relationship on your books while you’re still 98% old-school server based; after all, the OVH baseline pricing shows how cheap it can be to keep your toe in the water.

Almost every small business I see is in the strange position of following this approach by default – and feeling bad about it. They have servers and cloud accounts, but this makes them feel like cheaters or lightweights.

Doing the maths based on this year’s pricing for both the kit and the services shows that a combination is actually the best answer for most businesses I see.