Cloud storage costs 74% less than running it in-house. That’s the conclusion of Forrester analyst Andrew Reichman who says that storing 100 terabytes of cloud storage costs $251,000 per year, compared to the $1 million price tag for internal storage.

This is not to say that cloud storage is an ethereal utopia. There are latency issues. Redundancy costs vary and cloud gateways can increase the expense.

Still, Reichman says cloud storage costs considerably less:

You have to pay for maintenance. Most new storage systems cone with three years of support and maintenance. Costs add up. After the three years, you usually pay around 15% of the original purchase price per year.  In the cloud, the provider covers the cost.

Data migration can cost a fortune. The equipment needs periodic refreshing. And that becomes a nightmare. People lose data, the task is tedious and time-consuming. Most IT storage professionals end up paying consultants to do the work. Cloud-based storage is perpetual. There is never the need to transfer to new equipment.

Staffing is a big cost factor for in-house storage. You need people to maintain all the equipment. Online storage providers cover these costs as part of the offering.

It costs more to store redundant copies in-house. You pay for 100 terabytes of storage in-house but the cost is more as you need to account for the extra costs that redundancy brings.

Capacity management is a real nightmare. Inefficiency is a problem. It can cost a lot to get the most utilization out of storage. It can mean buying twice as much capacity in order to provide high availability.

Services Angle

This is the kind of validation that makes the story enticing for companies such as Nirvanix or Oxygen Cloud. It shows why the value is so high for a company such as Box, which offers storage and collaboration services. It all comes down to efficiencies for these service providers. They constantly shave costs. And in this economy, that may make all the difference for cost strapped businesses.