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Typical Costs Associated With a Physical Server

Physical servers (in your office) are purchased and deployed by the end user or by the IT personal hired by an end user. The costs associated with the deployment of a server will range significantly depending upon several factors, much like the cost of a car will vary depending upon the model and features. As shown below, costs can be categorized for easier comparison with other server options, such as a cloud server. 
  

Up Front Costs-IT

The specification and procurement of a server and the necessary operating system is a specialized process. It requires an IT person with complete knowledge of your current and future business requirements. Most home builders rely on a subcontracted IT team to advise them and procure the hardware from server manufacturers and server operating system resellers. Once the hardware is acquired, the IT team will go to work configuring the new server, establishing user and security protocols, and installing the business applications. 

Up Front Costs-Hardware

Business class servers are best procured from an established and reputable national manufacturer. For many years Dell was our recommended hardware supplier.

Software Licensing

Your business requires specialized licensed applications for accounting, estimating, scheduling, a sales-CRM system as well as the general business productivity tools like email, word processors and spreadsheets. Often these licenses are purchased by user and/or by workstation.

Software Maintenance Contracts

Most enterprise software applications that are specialized to your business and mission critical will be purchased from a software provider specializing in a specific industry. It is highly recommended that you purchase a software maintenance agreement to provide important software updates on a regular basis. Software maintenance insures those mission critical applications will continue to advance as new business requirements evolve.

Server Environment

This is not a significant factor in small networks of less than 5 users. However the environment where your server hardware is located will factor into the reliability and security of your network. Basic considerations include electrical power, Internet cabling, network connectivity, environmental controls (temperature and humidity), proper lighting, suitable workspace for IT personnel, and a secure locked room. 

Ongoing IT Maintenance Costs

All equipment requires maintenance, and servers are no exception to that rule. In fact, the ongoing costs can be so significant it is often an area where small businesses fail to plan and suffer the consequences of unplanned outages, data loss or low performance. Periodic maintenance includes the replacement of mechanical devices, like hard drives that will typically fail before other electronic components. Other maintenance costs will include IT labor to install software updates and patches to keep your server running smoothly for its expected lifecycle. 

Replacement Costs

What is the life cycle of a new server? The answer will depend on many factors such as; the original server specifications, how closely they matched your immediate business requirements, and if you factored in your business growth. Advancements in software (both OS and applications) and will your existing server hardware be compatible with the new software. Virtualization can extend a server life, however the IT depth (knowledge & experience) requirements for virtualization typically outweigh the cost benefits for a small business. Most recommendations point to a three year minimal life cycle. After the third year a business owner should prepare for a replacement server to avoid a risk to business operations.