The Economics Comparison: Two Different Cost Structures
On-premise cloud and hosted (public) cloud have fundamentally different cost structures. Hosted cloud is a linear operating expense: you pay per user per month, and total cost scales linearly with usage. On-premise cloud has high upfront capital cost but lower per-user operating cost at scale. The crossover point — where on-premise becomes more cost-effective over a 3-year period — determines which model makes economic sense.
Hosted Cloud Cost Structure
M A Global Network hosted cloud: ₹700/user/month + 18% GST, contracted yearly. Includes everything — hardware, management, backups, support, patching. The total annual cost for N users is: N × ₹700 × 12 × 1.18.
| Concurrent Users | Annual Hosted Cost (incl. 18% GST) | 3-Year Hosted Cost |
|---|---|---|
| 5 users | ₹49,560 | ₹1,48,680 |
| 10 users | ₹99,120 | ₹2,97,360 |
| 20 users | ₹1,98,240 | ₹5,94,720 |
| 30 users | ₹2,97,360 | ₹8,92,080 |
On-Premise Cloud Cost Structure
On-premise cloud has a high upfront capital cost (hardware, deployment) and lower per-user ongoing costs for management and support. Approximate costs for a standard on-premise deployment supporting 30 concurrent users:
| Cost Component | Amount | Timing |
|---|---|---|
| Enterprise server hardware (2-socket, NVMe, RAM) | ₹15,00,000 – ₹25,00,000 | Upfront |
| Network equipment, UPS, installation | ₹3,00,000 – ₹6,00,000 | Upfront |
| Deployment and configuration by M A Global Network | ₹1,50,000 – ₹3,00,000 | Upfront (one-time) |
| Ongoing managed support (annual) | ₹3,00,000 – ₹6,00,000/year | Annual |
| Power + cooling operating cost | ₹60,000 – ₹1,20,000/year | Annual |
| 3-Year Total (30 users) | ₹31,80,000 – ₹51,60,000 |
The Break-Even Analysis
Comparing 3-year costs for 30 users:
- Hosted cloud (30 users): ₹8,92,080 over 3 years
- On-premise cloud (30 users): ₹31,80,000 – ₹51,60,000 over 3 years
For 30 users, hosted cloud is significantly cheaper over 3 years. The on-premise capital cost is not recovered within the 3-year comparison period for typical Indian SME workloads. The on-premise economics only become favourable at very large user counts (typically 100+), very long time horizons (5+ years), or where specific non-cost factors (data sovereignty, very high internal throughput) override the cost comparison.
For most Indian SME workloads: hosted cloud wins on a 3-year TCO for up to 50–70 concurrent users. On-premise becomes cost-competitive only at very large scale (100+ users over 5+ years) or when non-cost factors (data sovereignty, specific throughput requirements) make it the necessary choice. Most businesses overestimate their scale relative to the on-premise break-even point.
Non-Cost Factors That May Override Economics
If your organisation has hard requirements for data sovereignty (data must physically remain on your premises), on-premise cloud is the correct choice regardless of cost comparison. Similarly, if specific throughput requirements (very large internal database operations) are impractical over internet bandwidth, on-premise provides LAN-speed access that hosted cloud cannot match. These are legitimate reasons to choose on-premise at any user count.
Frequently Asked Questions
Yes. A hybrid approach keeps sensitive or high-volume data workloads on-premise while hosting other workloads (business website, lower-priority applications) on hosted cloud. M A Global Network can design and manage hybrid infrastructure. Contact the team to discuss your specific workload mix and which components benefit from each model.
Consolidation into either hosted cloud or on-premise cloud (rather than maintaining multiple local servers) is a common outcome. The decision depends on user count, data sovereignty requirements, and existing hardware investment. M A Global Network's team provides a specific recommendation and TCO analysis based on your actual current infrastructure and requirements.
On-Premise or Hosted Cloud — M A Global Network Provides Both
Contact us for a TCO analysis specific to your organisation's user count and requirements.