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Insourcing vs. Outsourcing Cloud and Data Center Services: Which is Right For You?

The Scoop, Cloud Services, Data Center, Insourcing, WAN Monitoring, Outsourcing

Data center server room corridor with lights connecting in a network pattern

Cloud and Data Center services are essential to your business’s operations, making the decision of whether to insource or outsource a very important one.

This blog lays out five key differences between insourcing and outsourcing Cloud and Data Center services to help you determine which option will best serve your business.

5 Key Differences: Insourcing vs. Outsourcing Cloud and Data Center Services

1. Time to Market

If you decide to insource Cloud and Data Center services, be prepared for a lengthy implementation time. The time to construct and install all of the necessary infrastructure on-premise so that it’s fully functioning could take months, and that assumes you have the expertise in-house. Even if you have expertise in virtualization, you’ll need to consider things like backup, recovery, storage, network access, compliance, and security.

On the other hand, outsourcing cuts down on your time to market. The set-up is minimal and services can be available in as little as 2-3 weeks.

Fiber optic cables connected to an optic ports and network cables connected to ethernet ports

2. Scalability

When it comes to insourcing, investing in infrastructure doesn’t stop after initial implementation. To meet your growing needs, keep up with new technology, and meet ever-evolving industry regulations, you’ll have to spend more. For example, a SOC 2 certification for your data center typically starts at around $20,000 and can easily cost $100,000. Insourcing lacks scalability and flexibility because you can’t scale without purchasing and implementing additional infrastructure. Implementing additional power, cooling, storage, servers, and licenses are things that just can’t be implemented on-demand.

With outsourcing, you can scale for space, power, and cooling on-demand with no additional capital cost and no practical limitations. This also means you can move your HQ, or any other office building, without the cost of moving your infrastructure and networks. Moving your core head-end network is a high-risk proposition, and if not completed seamlessly, may expose your customers and users to hours or days of unplanned downtime. When outsourcing your datacenter by leasing colocation services, you get independence from physical and geographical constraints. This is one of the primary tenants of scalability—and to a successful cloud implementation, whether that be leveraging colocation, private cloud, public cloud, or hybrid cloud services.

3. Control and Oversight

If fine-tuned control of your Data Center and Cloud is most important for your business, then insourcing is your best option. You’ll get total control of, and access to, your environment, security, and data. However, this control also means increased responsibility and overhead to keep your business operations running smoothly.

If you want to focus on your core business without the distraction of supporting a non-core business expense, then outsourcing is the better choice. LightBound’s managed services offer 24x7 managing and monitoring, including 24x7 coverage of mission-critical infrastructure—something very costly, if not impossible to achieve, in-house. Your provider will take on any and all “headaches” for you, so you can have peace of mind and avoid investing resources and capital to manage a non-core business function.

IT engineer with tool cart working on a laptop computer in a large data center corridor full of rack servers

4. Risks

Insourcing brings with it increased risks and liabilities. Consider that if this is your first time implementing these services, there are regulations to become familiar with and you’ll lack experience in troubleshooting and handling disaster recovery (DR). Your DR efforts will also suffer because of a lack of geographic separation between your Data Center and place of operations.

By outsourcing, you can reduce your risks while not having to worry about a thing. A provider like LightBound has experience with hundreds of situations and keeps up-to-date with regulatory requirements so you don’t have to. Plus, outsourcing provides better geographic separation for mitigating DR and operational risks.

5. Cost

Increased responsibility and infrastructure means increased costs for insourcing. Having and maintaining a large amount of technology and internal resources, plus operating that technology, is no small expense. Costs can mount up, especially when keeping up with constantly evolving regulations, new technology, testing, and investing in a team to support and maintain that technology.

Ultimately, insourcing is 4-5 times more expensive, and that’s assuming you have all the talent and wisdom in-house to make it work and are in-step with regulatory requirements.

By outsourcing, there’s significant cost savings and conservation of capital. You won’t have the huge expense up-front for implementation or unexpected costs cropping up. Instead, you’ll enjoy a significant reduction in personnel costs and only pay for the services you need with the ability to easily scale up or down. You can expect a consistent, predictable monthly and annual cost without significant miscellaneous expenses.

Man working in data center and using a tablet displaying graphical data

What’s Best for Your Business?

Insourcing your Data Center and Cloud can be quite the task, but some businesses find the benefit of having total control outweighs the downsides. Outsourcing, on the other hand, relinquishes some control but comes with a slew of benefits including major cost savings and peace of mind. At the end of the day, the best solution for your business will be the option that best fits your needs and goals.

Be sure to check out our Case Study on Gauge, an Indianapolis-based telematics firm whose IoT application is changing the way fleet services are operated and managed. 



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August 29, 2018 / by Dane Dittemore