SaaS is a great way to go green and save a LOT of money on electricity.

How can a hosted solution save you money? Easy, no servers. As an example, one of our competitors provides an on-premises solution for CRM and accounting. They recommend a three server setup. Since this is a mission critical application, I will use redundant servers as my example.

1. Database Server – HP dl380 G5 – two 750 watt power supplies

2. Application server – HP dl380 G5 – two 750 watt power supplies

3. Reporting Server – HP dl360 G5 – two 350 watt power supplies

4. Tape Backup System – Dell PowerVault Tape Backup 114T – 85 watts

All told this is 3785 watts of electricity to run the three servers. Of course you can get cheaper servers that draw less power, but I would not want to run my critical business apps on any thing less robust and redundant. I will not take into account the extra cost of air conditioning because of heat generated by servers. Next set of assumptions:

1. Average cost of power – 10.03 cents per kilowatt hr – Source Energy Information Administration If you look at the tables you will see that costs vary by state. Just look up your state and find the right number for you.

2. Calculate the annual cost of 3785 watts by the average price of electricity – Source Wolfram Alpha The  average cost is $3326/year for electricity to run three servers. In Massachusetts the cost increases to $6684 per year. WOW!

Next is the cost of the servers, shipping to your company and setup. To make this a quick back of the envelope I will say the HP dl380s are $5,000 each, the HP dl360 is $4000 and the tape backup is $150. The cost of shipping these server is around $80 per box so total shipping is $200. Server setup is is another set of numbers, but lets assume you have staff who can do it as part of their job, so there is no incremental cost. The OS for each is $1029 WIndows 2008 Server and MS Sql Server is $5,737.

So back of the envelope calculation is $23,174 for hardware costs.

In 5 years it will cost you $16,630 for electricity and $23,174 for hardware or a total of $39,804.

Go green, get rid of your servers, reduce your carbon footprint and go SaaS.