Cloud computing has been around long enough – and established itself well enough – for most organizations to move beyond the initial question of “is cloud computing just a fad?” to “will we save money by moving to the cloud?”
To answer that second question, it’s important to carefully consider a number of direct and indirect factors that affect cloud migration. Direct factors include things such as hardware and software costs, licensing, network infrastructure and labor. Indirect factors are a little more fuzzy because they cover such “soft” issues as operational efficiency, productivity, compliance and business continuity risk, even the capex value of potential future purchases that will be avoided by moving to the cloud. Savings can go far beyond simply the value of all the IT stuff you no longer will have to purchase and maintain.
Let’s take a look at the savings available when migrating to the cloud:
- Reduced hardware costs
Simply put, you no longer have to worry about buying and installing new servers, hubs, gateways, bridge routers, and all the other gear needed to push all that data from the datacenter to the desktop. And let’s not forget all the hardware headaches associated with scaling up or down to meet changing demand.
The hardware cost savings don’t stop there. Along with the straight purchase or lease expenses of all that equipment there’s the cost of the room it takes up and the electricity to power and cool it. Large datacenters can cover a lot of real estate and generate copious amounts of heat. Getting rid of all of that can significantly reduce space and energy costs.
- Lower labor costs
Because the main hardware and access to data belongs to the cloud services provider, you should be able to see a significant reduction in IT labor costs because you don’t have to install, implement, and maintain all that equipment anymore. That headache now belongs to the service provider. Every purchase, repair, and upgrade is now theirs. That of course, is a direct cost – a liability. Now you can reclaim and repurpose the human resource value of IT staff no longer responsible for the care and feeding of a complex IT infrastructure. Instead, those valuable workers are free to focus their attention on more lucrative initiatives and add their contributions to the bottom line.
- OPEX vs. CAPEX
All that computing hardware and IT infrastructure is a capital expense that can cut into profitability. But when you migrate to the cloud, that capex disappears, replaced by a pay-as-you-go cloud solution that becomes an operating expense. The flexibility and scalability of opex IT costs means your company doesn’t have to pay for software and bandwidth that isn’t being fully utilized – both can be easily scaled up or down to meet demand and cancelled altogether if no longer needed. In some cases, more sophisticated, big-enterprise software can become affordable to SMBs, thanks to the economies of scale that can come into play as the expense gets shared with other users in the cloud.
- Improved risk management
When you own and operate your own IT ecosystem, you need to plan for it to catch fire and take on water. That means buying, installing and maintaining more hardware and software off-site to keep things safe and your organization up and running. Business continuity relies on resiliency and redundancy and that can come at a considerable cost. Operating in the cloud, however, enables you to skip the added expense of idle hardware. Any cloud service provider worth their salt offers best-in-class backup systems that provide state-of-the-art, bombproof protection for your data. That kind of secure, reliable redundancy provides peace-of-mind that’s worth more than it costs.
There is no question that the cloud will play an increasingly important role in your business operations. It is simply a matter of time before you move some or all of your IT ecosystem to the cloud. As you become less dependent upon internal hardware and software, you’ll see the savings associated with migrating to the cloud grow. Download our Guide to Adopting Cloud Computing for IT Leaders. If you would like a more personal discussion, reach out to us and we will schedule a call.Image Copyright: 123RF Stock Photo