Let's consider an interesting task: a start-up business of five enthusiasts (with limited resources of course) wants to set up a network in the most cost-effective way while not compromising reliability and performance. Here we explore several routes and affordable ingredients that are currently available (2012). We'd assume three employees would be stationary using network computers and the other two would be mobile working on laptops. For obvious reasons we'd stick with examples typical for the Triangle area (Raleigh, Durham, Chapel Hill - NC) however it shouldn't be too different in any urban area.

First, we'd break this project down into phases:

Internet connection and phone service

Our network set-up needs at least 5Mbp/s download speed, 1Mbp/s upload and 2 phone lines with 1000+ minutes of nationwide calling a month. Our options are:

a) Cable

b) DSL (assumes a landline phone service)

c) T1

d) Fiber-optics

f) Wireless (cellular)

DSL or T1 are too slow compared to Cable or Fiber, even very agressive pricing wouldn't justify picking these options because Cable and Fiber are very affordable nowdays and much faster.

Wireless connections (even 4G) still can't compete with the rest of the stationary solutions in all departments: speed, reliability, cost. Certainly our laptop operators could gain a lot from it but it's not a good choice for the main office.

Now that we narrowed it down to a couple options, let's see what it'd cost:

Cable Fiber
Stand-alone Internet, no static IP > $100 ~ $70
Bundled with three phone lines > $140 > $110

VoIP (Voice over IP) technology became a de-facto standard these days and significantly dropped the cost of telephone services. Simple google lookup led us to www.voipreview.org where we found a $5/month deal for 2 phone lines along with tons of features.

Final estimate for Internet and Phone service: Fiber + 3rd party VoIP at ~$80 per month (or Cable + VoIP at ~$110)

Hardware and Operating systems for network computers

At present there are three choices Operating Systems: Windows PC, Apple and Linux. Windows OS provides the widest selection of software written for it (huge advantage when it comes to specialty business applications) however it also comes with the wildest selection of viruses, malware, spyware, etc. It is cheaper than an equivalent from Apple however Mac users boast their peace-of-mind experience free of hardware/software conflicts, viruses and "the feel". On the other hand Linux Operating systems are simply free, they can run almost on anything but there is a not a whole lot of programs to offer. Yes, there are equivalents to Photoshop, AutoCAD, Microsoft Office however it's not 100% compatible and often it's a step-down or step-back from their Apple/Windows counterparts. At last users unfamiliar with Linux would inevitably stumble in a "foreign" environment at first.

Nevertheless, since our start-up business is limited on budget and we deliberately entered the mode of increased savings - there's no other choice but Linux: not only is it free but most applications written for it are also free. If we do have to rely on a program that only exists on a Windows platform then we could attempt running it via a Windows XP simulator or compromise by dedicating one Windows computer for this task. Allora recommends Ubuntu Linux (Fedora and Debian are also good choices).

Hardware decisions usually start with a CPU. We'd steer away from "the latest the greatest" and resort to something a year or even two older because it wouldn't cripple us, however cash-wise there will be a noticeable drop. Luckily there's an amazing website that gives the best CPU in the category of "bigger bang for the buck": cpubenchmark.net/cpu_value_available.html Probably this $75 CPU is the winner: AMD Athlon II X4 631 Quad-Core. Google search quickly found a $370 computer running on a 500GB drive and 4GB of DDR3 RAM. With a monitor and basic accessories the final price tag would land around $500. Alternatively for this amount we could get an All-in-one desktop running on a noticebaly weaker CPU under some Home Windows edition. And sadly, iMac price tags start at $1200.

Linux laptops adequate for productive work fall into $700 range. Our total for three network computers and two laptops is ~$3000.

Data Storage for collaboration and Email solution

There are three things that come to mind around the task of establishing Data Storage:

1) Server 2) NAS [network attached storage]     3) Cloud solution

The Server and Cloud scenarios would also give us Email options which scraps the NAS route. Building and Maintaining an in-house server is not exactly cheap, in order to set up a network with a server we'd endure a financial hit due to the server's cost, besides it'd require technical expertise and most likely a need for outside IT Services
  • The server solution provides the speed because collaborating via LAN (local area network) is superior to cloud solutions; it's independent of the Internet connection and any potential problems around it; you are in total control over your data (physical access)
  • Cloud Data storage and Email solutions require almost zero maintenance on the client's part. The provider is 100% responsible for Backups, SPAM filtering, hardware problems,etc. This is more of a hassle free path lacking some advantages of a server-based network but bringing some important bonuses too

Given the nature of our project we'd choose the way of cloud data storage. Google Apps would fit the bill quite nicely. Microsoft's Office 365 is more expensive and its strong focus is set on integration with pre-existing Server-based Networks. We should also mention Ubuntu's native cloud solution: Ubuntu One. It lacks email capabilities and it's not meant for business collaboration though.

The yearly price for Google Apps is $250. We'd need extra storage on top of 1GB per user at Google Docs. 1T costs ~$250 per year.

Office productivity software

This is a delicate area because it greatly depends on personal preferences and pre-existing skill sets.

OpenOffice is a free desktop application that has rich capabilities, it can also open/save Microsoft Office documents. Of course, it must be installed on every network computer.

Google Docs is a set of web-applications, most browsers would run it just fine. It's perfectly suitable for casual tasks of creating ordinary office documents (spreadsheets, text documents, etc). The interface of Google Docs is clean and simple. The drawbacks lie in its online nature: compared to a desktop office application Google Docs seriously suffers in the area of responsiveness and interruptions. Certain operations would inevitably trigger pauses to wait till "Working..." tag disappears. There is a rather wide scope of complex tasks that Google Docs wouldn't handle at all.

The good news are that there is nothing wrong with implementing a hybrid approach. Google Docs is always there regardless of your prime workstation and it can handle the majority of office documents. More challenging goals can be achieved by the means of OpenOffice.

Summary

At this stage we're armed with a road map to set up a network at a low cost. Let's take a look on the financial impact both short-term and long-term. We'd also consider how it compares to a tradional setup of Microsoft's Small Business Server.

Initial investment 1st year cost Total cost over 5 years
Low cost IT solution
Linux + Cloud
$3000 $1500 $10500
Traditional Microsoft's
Small Business Server
$7500 [$3K server +
$4.5K workstations]
$1200 $13500

It's important to understand that the potential cost of IT consulting or IT services falls outside of this estimate. Perhaps one of the partners of such start-up business would handle all technical aspects thus it's hard to estimate the cost of his time invested into IT infrastructure. Most likely there will be a need for an IT consultant (Allora is always at your service!) while it's hard to predict the level of such involvement and overall hit to the IT budget.

As we see the original  savings of $4500 slightly dissolve to become a $3000 gap after five years. Sadly 80% of start-up business owners fail within the first five years. Who knows, perhaps the initial saving of $4500 would send our entrepreneurs into those 20% of success stories.

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