By R. Christopher Haines, Executive VP and Chief Operating Officer

Are you in the Cloud? If not, you’d better get in the Cloud. All the cool kids are in the Cloud. That’s a good enough reason, isn’t it?

If you are in the Cloud, why are you there? What sold you? The promise of unlimited server resources at the flip of a switch? The idea that you could have your system and your data spread across redundant equipment all over the world? If those are your reasons, we hate to rain on your parade. But are you sure you’re even in the Cloud?

This may be the most confusing topic in IT. It’s been spun so many ways by marketing departments and sales guys that nobody really knows what they’re buying.

Many people who think they’re in the Cloud aren’t. Many insurance companies were sold Core in the Cloud or BI in the Cloud, but their systems run on servers the software company owns, housed in datacenters somewhere. This setup isn’t a bad thing at all. But it’s likely not people were sold or what they thought they were buying.

All the hardcore techies are pushing the Cloud on anyone who will listen. But why? It’s great for running web apps or small systems. It’s nimble and affordable. But large insurance systems are a different story. When you do the math, the Cloud isn’t cheaper than traditional hosting in a colocation.

With traditional hosting, you get bandwidth, Windows licensing, 24/7/365 remotely monitored intrusion detection/prevention, antivirus software, and dedicated servers. You can run as many systems and process as much data as you want for the same fixed, monthly fee.

In the cloud, you’ll likely pay per hour of usage, for a set amount of capacity (processing speed, RAM, et al.), in a shared environment, with a set amount of bandwidth. Exceed any of those limits, and you incur additional charges.

Example: You pay for hosting on a dedicated server, running Windows Datacenter, with an unlimited numbers of virtual environments on the machine. (Let’s say 10, for the sake of argument.) No bandwidth caps. No metered usage. No charge for 24/7 uptime. You pay $X per month. (Let’s say $950, for the sake of argument.)

In the cloud, you’d pay for 10 billable environments; metered bandwidth, for which you pay by the megabyte or the gigabyte; and measured data storage, for which you pay accordingly. If you get one virtual server for $5 an hour, and there are 720 hours in the average month, you’re looking at $3,600 per month. At $2 an hour, that’s still $1,440 per month. And none of that includes bandwidth charges, storage charges, or overage charges.

So, the Cloud is more expensive. But is it more secure? Does it guarantee higher availability? Those are both up for argument.

Yes. We live in a virtual world. But bricks and mortar still have value. And savings notwithstanding, there’s a measure of comfort in knowing you can go find your data and touch the machines in which it lives — even if you never want to. There’s also value in dedicated servers that don’t require you to share space with other companies.

If you’re going to the Cloud to cut the cost of running your own datacenter and equipment, okay. But the same opportunity is available from a hosting provider that operates from a known location. And it’s probably less expensive.

You can get all of the benefits of the Cloud, without real or potential risk. Take a look at hosting providers. They can give you almost all of the Cloud benefits but with less cost; in a known, bricks and mortar location; with equipment dedicated to your company.

You’ll get the convenience of the Cloud, with down-to-earth benefits.