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Online vs. offline storage – which is better?

In the first series of the Small Business Success series, AAMI presents instalment five: ‘Home Office Solutions: Online vs Offline Storage.’

Have you ever been working on a document for hours only to have it corrupted by the hard drive or server that you were working on? The diligence of saving a document is sometimes irrelevant when a piece of hardware suddenly decides to pack in, making hours and possibly weeks of data evaporate in an instant. One of the biggest causes for data loss, within a range of scenarios involving natural disaster, theft, and human error, is hardware malfunction.

“A company that experiences a computer outage lasting more than 10 days will never fully recover financially. 50 percent will be out of business within five years,” (Toigo, 1989).

For small business owners safely storing data may not be an initial top priority, but choosing the right storage solution for company data could be a business-saving decision. More than half of home-based businesses are operating from a moderately sized server and storage system base, which is still subject to all the data loss scenarios of any large scale business, including natural disaster, human error, theft, power outages or hardware malfunction. The need for optimal storage solutions could mean the difference between a small technical repercussion to a loss of business.

Hard Drive vs Cloud

Cloud hosted backup has emerged as a proven high-security and user friendly online data storage solution in comparison to traditional off-site backups, as it entails third party hosting to facilitate safety during file uploading. When selecting a cloud storage option it is better to differentiate the reputation of the supplier rather than cheaper price, in addition to features.

Advantages of Cloud Backup

  • Easier system for staff;
  • Great mobility  and accessibility on multiple devices;
  • Document sharing easier for multiple users/staff;
  • Can be advantageous for companies facilitating staff working from home, or on the road;
  • Storage up to 7GB can be free from some companies, which is ideal size for SMEs and start-ups;
  • Allows integration with newer technologies such as smartphones and tablets;
  • Data servers connecting to storage centres have regular technical maintenance and help desks;
  • Data is safer from viruses and malware as compared to physical storage solutions.


  • Uploads can be slow depending on ISP load limit;
  • Hard drives are usually quicker than offsite servers to recoup data after a workstation is replaced;
  • Prices vary however 500GB storage or more could cost business owners up to $50 p/month;
  • Some companies may be limited to file/storage size and device compatibility;
  • Possible liquidation of server provider;
  • Potential costs to ensure your company’s privacy processes meets requirements.

In March 2012 BeeCloud, closed for business leaving many customers with no alternative but to find a quick storage substitute. They notified customers via email that their customer accounts would expire within a small timeframe and they would be forced to find a back up solution.

Online Storage Solutions 

Amazon Cloudbetween $0.123 per GB (1TB) – $0.055 per GB (5TB), 5TB max storage

Google Drive – 5GB free, 16TB max storage

Microsoft SkyDrive – 7GB free, 100GB max storage

Dropbox – 2GB free, 1TB max storage

Cloud Drive – 5GB free, 1TB max storage

Apple iCloud5GB free, 55GB max storage

Mozy – 2GB free, 125GB max storage

Note: correct as at time of publication. 

Hard Drives

These are small enough to fit in your pocket, however, when thinking about backing up data for a small business hard drive storage capacity will need to be anywhere between 100GB to 9TB in size. Accounting software alone requires ample storage for reconciliation and remittance documentation. Prices in recent years have become quite competitive and an average 500GB flash drive can be bought for less than $100, yet its shelf life can be just as short as that of a high-use mobile phone. Storage size is dependent on business, for example: photographers need a growing daily gigabyte allowance to allow for proofing images to and from their client, as well as cataloguing their previous work.


  • Small storage units are cheap;
  • Intellectual property data of business is not in the hands of a third party;
  • Can be connected to other media such as projectors, data centres, and televisions;
  • Solid state hard drives have no moving parts and are designed to last (on average) for 10K writes.


  • Backups always need to be taken physically off-site;
  • Automatic backup software can be interrupted by server and software disruption;
  • No access to help desk or security support;
  • File sharing capabilities may be limited depending on how many people are using the drive;
  • Hard drives have a shelf life; backups also need to be backed up;
  • Can be damaged or corrupted easy when dropped or removed from a device unexpectedly;
  • SMEs may not have access to administrative or technical expertise when monitoring a business server and hard drive storage system increasing the likelihood of third party hacking and technical issues;
  • Staff can forget to take drive off-site or hard drive can be stolen once taken off site.

Quick Price Comparison (500GB worth of storage)

An average small to medium business set up will usually need two backups to rotate between to ensure that one drive is always off-site. When working with a 500GB storage scenario we can compare the cost of online versus offline storage:

x2 500GB external hard drives (ranging between $50 – $100 each) will cost the business owner = $100 – $300 p/year

Offsite monthly storage for 500GB (ranging between $20 – $45 each) will cost the business owner = $240 – $540 p/year

The big comparison

Our previous insights into the advantages and disadvantages of storage systems leans towards the growing trend of the ‘cloud’ as a simple home office storage solution, and possibly the more cost effective option too. Some of the smaller online storage solutions offer a free trial, or subscription if under 7GB, which could be advantageous to businesses owners wanting to test the online cloud before fully committing to an on-going storage solution. If you’re still not entirely convinced about making the data migration from hard drive to cloud, you are best to trial both systems for six months to weigh up the logistics of using each, and see which best services the storage needs of your business after this time.


This article is presented by Australian Associated Motor Insurers Ltd (AAMI, ABN 92 004 791 744), the issuer of AAMI property insurance products. AAMI has not taken into account your objectives, financial situation or insurance needs.

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Tony Young

Tony Young

Tony Young is the Executive Manager for <a href="http://www.suncorp.com.au/insurance">Suncorp</a> Commercial Insurance Distribution. Tony holds a Bachelor of Economics (SYD University) and is a qualified Charted Accountant. He is recognised for developing the online, over the phone and relationship managed customer value proposition for the <a href="http://www.gio.com.au/business-insurance">Suncorp</a> direct business insurance channels.

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