Abaca Technology Corp., which launched in 2005, offers physical and virtual anti-spam appliances. The company uses Amazon’s EC2 cloud computing service to host the software that works with its appliances. Without EC2, it would have been much harder -- and much more expensive -- to launch Abaca, according to Bill Kasje, vice president of Business Development. “As a small company, we were able to get our servers up and running quickly,” he says. “We didn’t have to invest in a big infrastructure environment, or have backup power and redundancy, all the things our customers expect from us because email is a mission-critical application.” Though Abaca does deploy in-house servers, it would need at least four more, in a cluster configuration, if it were hosting its software in-house, he says. This way, Abaca’s IT team could focus on the company’s core competency: filtering spam.

For many small companies, the smorgasbord of newly available off-site or “cloud” computing offerings means they can reduce the number of servers they purchase and maintain in-house. In fact, according to James Staten, principal analyst as Forrester Research, they may no longer need servers at all.

“There are now options available over the Internet that didn’t exist before,” he explains. For instance, companies used to use servers for file sharing, but there are many Internet-based options such as Microsoft Windows Live, Dropbox, and so on, that provide the same options over the Web. “Backups can be done over the Web too,” Staten adds, “and it looks almost exactly the same as when you back up to a server. A lot of people have print servers, but that’s not really necessary any more either, with today’s network-based printers, or wireless-enabled printers with built-in print servers.” In fact, Staten believes, many small companies no longer need any in-house servers at all.

Better without servers

Why reduce or eliminate servers? “The number one advantage is it gets you out of the IT business,” Staten says. “You don’t have to worry about high availability.” [A high availability configuration ensures continued function by connecting two or more servers in a cluster so that one can “fail over” to the other in case of a problem.] You no longer need to worry about off-site backups, emergency power supplies, or how your company would preserver its data in a widespread disaster like a hurricane, since all these protections are now provided by an off-site by a service provider, and defined in your contract.

You can also get by with fewer IT staff, Kasje says. “We would have to have IT staff monitoring systems around the clock. All we have to deal with are the software issues, so that’s much easier. There is a whole class of problems we don’t have to address.”

Not having servers on site means much lower upfront costs, though it also means ongoing costs to pay for a service or server space. “You’re trading capital expense for operating expense that you can adjust up or down, depending on your needs,” Staten says. And while the day-to-day costs may be similar, or perhaps lower for owned equipment amortized over several years, off-site servers can provide lower cost if you take risk into account. “There are so many more things to account for,” he says.

Three off-site options

For companies that want to cut their server count and turn to Web-hosted options instead, there are three different basic options to choose from:

  • Software-as-a-Service (SaaS) In this approach, an application is provided by a SaaS provider and runs on its servers. Your employees (or customers) use the Internet to log into the software. Well-known examples include Salesforce and Google Documents.
  • Hosted servers In this approach, you contract for server space -- or even an entire (real or virtual) server at your provider. In many ways, you can treat this off-site server as if it were a regular server, loading applications and data onto it as you see fit. However, the hosting provider maintains the server, usually providing backups, security protections and such. Rackspace and Hostway are two examples of this approach.
  • Raw cloud space “Cloud” is a relatively new term that is often used to describe any Web-hosted offering. Strictly speaking, it simply refers to the architecture by which software and/or data reside in a network or “cloud” of servers connected by the Internet, rather than on a single machine. You can lease raw space in the cloud, for instance, from Amazon’s EC2 service.

In this setup, you are still responsible for managing your own server space. If your provider had an outage, in the case of SaaS, the application would be up and running as before once the outage was over. In a hosted server setting, the provider would restore data on the servers, providing the configuration you had before the outage. In a cloud computing outage, once the outage was over, your IT staff would need to reconfigure and reload your online server with the applications and data that were there before. You would be responsible for ensuring backups, and also the security of your data.

Because of these added tasks, Staten doesn’t recommend pure cloud computing for small companies unless they also have solid in-house IT expertise. On the other hand, he says, “If you’re really tech savvy, these are great new options to avoid ever having a server within your walls.”

Whichever option you choose, Abaca’s Kasje recommends giving off-site computing a try. “You can step into this very easily,” he says. “And you should be able to figure out very quickly whether it’s something that can benefit your business.”