One of the great debates of modern information technology is “In-house or outsource IT?” On the one hand, there are some significant advantages to sticking to having an in-house IT department with in-house servers hosting your software, applications and databases. On the other, the benefits of managed hosting are many, and the costs can be surprisingly affordable.
But costs are not the same thing as ROI. So the question is how do you calculate the return on your investment? It’s about as complex as you might think. ROI is a ratio, after all, of value gained versus money spent, which means you cannot begin to tackle the question of ROI until you have determined the total cost of ownership (TCO) of your managed hosting and that of your in-house IT.
One of the distinct differences between managed hosting and in-house IT is in upfront investment. Most in-house IT systems are going to involve, at minimum, tens of thousands of dollars’ worth of hardware, software, training, manpower, and development. Compared to managed hosting, which generally shortcuts all but the training and possibly some development costs, the upfront costs of in-house IT are significantly higher.
The other half of calculating TCO is determining ongoing costs. The ongoing costs of an in-house data center include repairs, upgrades, re-training, scaling, and the occasional total overhaul as new technology develops. Ongoing costs of a managed host include monthly payments for services, including increases in costs for scaling and increasing services as your needs expand. Costs for ongoing managed hosting tend to be significantly less than the ongoing costs of in-house IT.
In short, the TCO of an intelligently chosen managed hosting solution is dramatically lower both upfront and ongoing than in-house IT for many organizations. For those businesses, managed hosting is the clear winner from an ROI perspective.