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  • Scott Mainellis

Local hosting vs. cloud hosting: Which is better?

Small business owners are often concerned about how to best host their computer applications and systems. Your best solution may be a hybrid of local and cloud hosting.

Man standing at computer checks local hosting and cloud hosting setup.

Small businesses have a variety of options when it comes to hosting their information technology (IT) systems and services such as e-mail, the company website, applications like QuickBooks or Microsoft Office, file storage, and data backup. Businesses can put all or none of it in the cloud, or have a combination of both.

Until recently, hosting all in the cloud was not an option. Cloud services were not available for many applications and practices. It is still true that all of these services can be hosted (or installed) locally on a company’s internal network. However, many businesses choose to have at least some hosted in the cloud by an outside provider, and for smart reasons.

So, which IT services should a small business put in the cloud? Here are some considerations:

Protection from hackers

One mistaken assumption is that if you host your IT services and programs yourself they will be safer from hackers. This is true only if there is no need to access data from outside the company network. If it is truly an internal resource, with no outside entry points (such as an internally accessed database), then it is generally more secure to host it internally.

However, realistically, some services must be accessed by the outside world; namely, your e-mail server and company website. If you choose to host those yourself, you must then “poke holes” in your firewall so that the outside world can send you messages and use your website. You have now just put a big target on the back of your network. Any hacker in the world can try to get into your systems, the same way they can try to get into those systems if they are hosted in the cloud.

If you intentionally "poke holes" in your firewall, you have now just put a big target on the back of your network.

In effect, you are now your own cloud service provider. Here’s the key difference, though: The cloud provider has a whole team of IT security experts working 24/7 to keep their systems safe. The small business doesn’t.

Reliable redundancy

Another consideration is reliability. A cloud service provider will have redundant-everything in their data centers: redundant Internet connections, servers, storage, and power; even redundant data centers themselves (called co-location facilities). While small businesses could build all of those redundancies themselves, it is never cost effective to do so.

Consider speed and performance

Performance is a key factor, too. Accessing resources from a server on your local network is far faster than accessing them over the Internet. This isn’t an issue for websites or web-browser based applications, as they are specifically designed to be accessed over Internet connections. But speed is a big issue for a service like file storage. Most internal networks operate at ten times the speed of an Internet connection.

Opening a large data file (e.g., a Word doc or Excel sheet) from your local server may take 1-2 seconds, whereas it will take 10-20 seconds from a cloud server. If you open dozens of files like that each day, that time loss adds up. However, if the majority of users accessing these files are out in the field on Internet connections, it can make sense to use cloud storage, as it will benefit the majority of your people.

A hybrid solution may work best

Data backup is a service that benefits from a hybrid solution incorporating both the cloud and local hosting. Local backups are created and restored at much higher speeds than a backup system in the cloud. But, it is important to keep data off site, in case there is a fire, flood, or robbery at the office. Having both a local backup system and a cloud backup process makes a lot of sense.

There is much to consider as you weigh the pros and cons of hosting IT services and programs internally (locally) versus in the cloud (remotely). An experienced IT partner can help guide you through these decisions to keep your business’s data safe and processes optimized.


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