By Zetta Guest Blog

With profit margins continually under pressure, MSPs are looking to value-add services such as backup and disaster recovery as a means of boosting profitability. A recent survey by Zetta.net demonstrated that almost one-third of businesses are actively planning to add another form of backup to supplement their existing approach.

But many MSPs have not yet assembled the platform required to offer enterprise-class backup or disaster recovery to customers. So should they invest months in erecting their own infrastructure? Such a decision should never be taken lightly. It is essential to achieve a full understanding of the costs involved.

The primary expense, of course, is the acquisition cost of the storage itself. Once that purchase had been made, you will need to factor in more expenditures than you at first realized. It is best to tally up all of these costs to come up with an internal price per GB overall. But be careful to take into account the price of hardware, software, support costs, personnel, power usage, cooling, networking and everything else that goes into storing data.

Begin with the Capital Expenditure (CapEX) of the hardware and then obtain a realistic estimate of the many Operating Expenditure (OpEx) items. As a rule of thumb, the following OPEX costs apply: scalability costs (to be able to ramp up and down as required) come out at roughly 5% of CAPEX, hardware support is around 18% of CAPEX, and software support is 5% of CAPEX. That already amounts to an additional 28% on top of the initial hardware expenditure. But additional OPEX costs apply, such has data center hosting at about $24,000 per year, networking costs of about $12,000 per year and personnel costs per year of $100,000 or more. These elements have to be taken into account in order to properly evaluate the build v buy equation.

By this point, you should have figured out a rough price per GB. This tends to be an underestimate, but it will do for the moment. Now find out the price of doing what you want to do in the cloud. What you want is a simple and all-inclusive price per GB. Low-ball figures from some providers either mean hidden costs or poor support. But if it’s a comprehensive number, you can compare that to your build-your-own total. It’s doubtful if that number would be higher for the cloud.

It is understandable that some MSPs may remain skeptical about the pricing of the cloud. That’s why you should do the exercise laid out above and see how the numbers pan out in reality. But do it thoroughly and take into account all possible costs. It is increasingly difficult for MSPs to provide storage, backup and disaster recovery services more cheaply than can be done in the cloud. Providers like Zetta.net take advantage of economies of scale in terms of hardware and software licensing that enables them to provide sophisticated backup and data protection services at an affordable price. To learn more, download the Private vs. Public: Cloud Backup tech brief.

Guest blogs such as this one are published monthly and are part of MSPmentor’s annual platinum sponsorship.