This may have been done to death on Experts Exchange already, but I'd like feedback and advice for our situation. Our Engineering company is smallish with 112 users. We have an on-prem server consisting of a SAN and 2 clustered servers running 5 Hyper-V Windows 2012 servers. Most users are on our LAN but we also use a Fortinet firewall appliance for remote access. It works really well but the servers and SAN are 7 years old so I'd like to replace them to stay within warranties and to avoid outages.
My boss has said lets use "The Cloud" so I've done some costings. We need around 8TB of storage (we store a lot of 3D models, videos and pics). We have some software that is best keep on-prem (Autodesk Vault) so we will still need something for a server here. I'm in New Zealand and the closet data centre is in Australia which is 2155 km's (1340 miles) so there are also latency and download speed issues. We would probably need to upgrade our internet connection as well which for us is around NZ$4700 / month
I've looked at Azure, M365 and on-prem. I've considered costings over 5 years since I think we should be replacing servers at that interval.
To put our servers on Azure I think will need 3 VM's + Exchange online. The cost for this using the Microsoft Azure costing tool works out at about NZ$240K for 5 years excluding the upgraded internet connection.
The cost for MS 365 E3 including our additional data requirements works out at around NZ$376K for 5 years.
The cost to just replace our SAN and 2 servers + upgraded Windows, labour and on-prem Exchange is around NZ$113K for 5 years. The new units would go straight into our existing infrastructure.
I understand some of the advantages of the Azure and especially the 365 platform but it seems a premium price to pay for what would be a reduced performance in terms of download and latency. We would have little reduction in IT requirements (which is just me part time on IT since I'm mainly a Mechanical Designer) since the servers are pretty easy to keep running and mostly I deal with users problems and they won't go away whatever system we use. Apart from a need for increasing disk space (this server would come with 28TB useable shared between the HyperV VM's) our server really hasn't needed to change so the flexibility offered by these platforms doesn't really help us much.
So here's what I'm wondering. I know there is a lot of hype to go to the cloud and I've read articles describing on-prem servers in this day and age as the worst idea ever but, in my woefully uniformed state, I can't get my head around the price and performance difference between cloud and on-prem just to hang our whole company on an internet cable running under the sea to another country 1340 miles away. What am I missing?