Cloud Vs On Premise Email Archive Setup: A Step-by-Step Cost Benefit Analysis

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This cloud vs on premise costs document highlights the TCO for a customer who has 3000 mailboxes deployed on an on premise Primary mail platform (as a sample) and who is making a choice between a cloud vs on premise archival system.

The cloud versus on premise cost comparison is complicated. Cloud setups by their very nature follow the Opex model of costing. While on premise setups are typically a combination of Capex and Opex costs. For in-house setups, there is a fixed upfront cost to purchase equipment, servers, storage etc and then an ongoing Opex cost to maintain and run this setup.

For the purpose of making an apple to apple comparison between a Capex intensive on premise setup and an Opex based cloud setup, we have assumed a lifetime for all capex purchased, and converted these expenses into annual opex costs.

Also for the sake of building this cloud vs on premise document, we have assumed an on premise archival solution with average costing and have compared it with Mithi’s Vaultastic cloud archival service.

A similar exercise to the one we conducted for our on premise vs cloud cost comparison, done for any other product and service, will result in quite a similar outcome. While the content may vary, the context is the same.

We would need to start by defining the ideal architecture for an on premise setup, so that we can arrive at its annual bill of material. The bill of material should also consider the various teams required to maintain and monitor the setup, which is an integral part of any self managed infrastructure.

On Premise Email Solution Architecture

 In Premise Email Archival Solution Architecture
It also demonstrates the various teams required to maintain and monitor the setup.

Thus to make this setup possible we will need the following components:

This annual cost assumes that one server has a 3 year life (warranty) and is purchased for an upfront cost of INR 500,000

On-Premise architectural components and costs


Component Annual cost* (INR) Description
Infrastructure Elements and Costs
Two Archival servers in a cluster (fail over)
SAS Storage
(live store)
7,28,000 Need 65TB of live store, which costs 11,200 per TB a year. SAS storage is purchased for an upfront cost of 33,600 per TB and has a lifetime of 3 years.
Backup Tape system 3,00,000 Considering a reliable system with multiple tapes to cover 8 years, purchased at an upfront cost 9,00,000 and has a life of 3 years
Data center costs (for all equipment) 2,00,000 Co-location and network charges
Automated monitoring via a SaaS tool 15,000 Using SaaS monitoring tools
Services Costs
Day shift administrator 6 people (3 shifts over 24/7) 18,00,000 Assumes a cost of 25,000 including salary and overheads
NOC operator 3 people (3 shifts over 24/7) 9,00,000 Assumes a cost of 25,000 including salary and overheads
Software Costs
Archival software subscription 15,00,000 Assuming a per user, per year subscription of 450 of whatever solution you choose. (This will change to the appropriate value of the chosen application.)
TOTAL Annual cost (in Rs) (A) 57,76,334
Effective cost per user per year =(A)/3000 1925

Note: This setup does not consider a DR site or redundancies to achieve extreme high availability as is promised by cloud setups.

Vaultastic setup and cost for 3000 users

For a SaaS service, you don’t have to provision any infrastructure. Rather, you simply sign up, provision users and consume the services.

The following are the components of a cloud infrastructure for an email archiving setup. The customer needs to consider only two components, viz. The bandwidth and the internal IT team to front end the queries by the end user.


Cloud architectural components and costs

Component Annual cost* (INR) Description
Infrastructure Elements and Costs
Bandwidth consumption 1,00,000 This covers the Internet bandwidth consumption for archiving mail from the on premise setup to Vaultastic. This is approximately 5 mbps across all devices and locations with average assumptions of consumption patterns (peak hours etc)
Services Costs
Day shift administrator 6 people (3 shifts over 24/7) 18,00,000 Assumes a cost of 25,000 including salary and overheads. These are the internal helpdesk staff who support the 3000 users by taking back to back help from the OEM.
SaaS Costs
Vaultastic subscription 25,50,000 Assuming a per user per year subscription of 850 for the TRACER subscription, which offers unlimited storage and 7 year retention of email.
TOTAL Annual cost (B) 44,50,000
Effective cost per user per year =(B)/3000 1483

Comparing a cloud vs on premise setup costs

The table below summarizes the above mentioned numbers and demonstrates a cloud vs on premise setup. The cloud setup is more cost effective than an in house setup. In addition, offering tremendous benefits in terms of reliability, security and ease of scale, which cannot be easily quantified (problems in these areas lead to frequent downtimes, data loss and dips in performance, which impact productivity)


The Cloud vs On-premise cost comparison


On Premise Setup
(Based on Bare metal and the chosen archival application)
Cloud Setup
(Based on Vaultastic TRACER Subscription)
Infrastructure Costs (Annual – INR) 15,76,334 1,00,000
Services Cost (Annual – INR) 27,00,000 18,00,000
Software/Subscription Cost (Annual – INR) 15,00,000 25,50,000
Total Cost (Annual – INR 57,76,334 44,50,000
Effective per user per year cost (Annual – INR) 1925 1483
  • Provision server and storage infrastructure on premise (bare metal or virtualized). Furthermore, deploy the Archiving software on this infrastructure and configure for high availability and security
  • Subscribe, Configure and Consume the services
  • Setup a server and storage in your data center and install the chosen archival software on it. The server capacity and storage capacity will depend on the number of users and the retention period. The users will access this over the LAN/WAN.
  • No infrastructure expected at your end, except an Internet connection to allow transport of mail from the Primary mail servers to the Archival service on the cloud.
  • Captive private deployment with full control
  • Can use existing components for compute and storage (if available)
  • Opex model, pay as you go, no Capex required
  • No maintenance and monitoring of infrastructure
  • Guaranteed performance and durability of data
  • Unlimited storage, with automatic hands free growth on demand.
  • Solution and platform designed for high security
  • Setup needs to be designed for reliability, security and high availability.
  • Re-architecting required for growing storage demands.
  • Re-architecting required for new security threats
  • Plan upgrades and updates of the software to handle new solution demands
  • Internal Teams to maintain and monitor the setup 24/7 and deliver on SLA
  • Capex to purchase and AMCs to maintain the infrastructure.
  • Setup needs a backup solution in place for disaster recovery.
  • Archiving and access to the archival application on the cloud can put pressure on the Internet bandwidth

In Conclusion

It is observed that when it comes to cloud vs on premise, the TCO of a cloud setup is lower or almost at par with the TCO of an on premise setup. However, cloud setups offer numerous other benefits, which are difficult to quantify in terms of scalability, performance, ease, convenience, and security.

This means that besides the other benefits, the mathematics behind a cloud setup is also in favor of moving your workload up into the cloud.

(*) The rates are got from reliable sources on the Internet. Even though they are subject to change or may vary, they give a good indication of the cost and allow building out a comparison.
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Marketing Consultant with a career spanning 14+ years. Writes about emerging tech in cloud, collaboration, mobile, AR/VR, career advice, and digital marketing. He actively contributes to Quora, LinkedIn and Twitter.

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