How Cloud Computing Can Save You Money

How Cloud Computing Can Save You Money

“Over the long term, absent of other barriers, economics always win.”
Andy Bechtolsheim, co-founder of Sun Microsystems.

Bechtolsheim made this announcement when presenting on the potential of cloud computing, where he stated that ultimately, it will be economics that dictates worldwide adoption of this new technology. And as far as economics are concerned, cloud computing is right at the top in its ability to cut costs.

When Bechtolsheim speaks, I would suggest we listen. After all, not only was he a co-founder of one of the defining IT companies of the 20th century (Sun Microsystems), he also realized the true potential of one of the giants of the 21st century long before others did, when he invested in Google in 1998. As we can see, Bechtolsheim has a history of winning bets to back his assertions.

What Bechtolsheim says about cloud computing is nothing new. Almost any article glorifying cloud computing extols its cost-cutting virtues, much in the same way any article vilifying the technology mentions its supposed security drawbacks. In this article, we will not restrict ourselves to not merely mentioning cloud computing’s ability to save you money, but how it can be actually achieved.

1. Economies of scale – Cloud computing companies can utilize economies of scale to offer cheaper rates to your business. In other words, the service providers can buy IT equipment in bulk to lower unit acquisition costs, and some of these cost savings are passed on to their customers. Consequently, this price is much lower than what you would pay to buy similar equipment from the retail market.

2. Pay as you use – Cloud computing companies operate on a pay-as-you-use model, or in other words, a demand-only model. As a business availing of cloud computing services, you only pay for the services you require and use. This works out to be much cheaper than acquiring equipment you hardly use.

3. Running costs – Often, running costs comprise a big chunk of the annual IT budget. They include physical maintenance, upgrades, personnel salaries, etc. By shifting to cloud computing, you are free of such expenses.

4. Operational costs vs Investment costs - When you acquire expensive equipment, that’s considered a capital expenditure, and a big one at that. Also, your acquisition depreciates over time. With cloud computing, your one-time expense is spread across several operational cycles, becoming part of operational costs. As any corporate finance professional will tell you, this is a much better alternative. Factor in the time value of money, and the balance shifts even more towards cloud computing.

Cloud computing’s ability to save money is recognized by the very people who have the greatest stake in IT costs – the Chief Information Officers (CIOs). According to a Gartner study, cloud computing is the No.1 technology priority in 2011 for CIOs worldwide.

Cloud topped technology priorities globally, and this was confirmed when we asked how soon more than half of their business transactions would be conducted over IT platforms in the cloud,” said Dave Aron, distinguished analyst for CIO research at Gartner. As per the study, from a current figure of 3%, as many as 43% of the CIOs expect their companies to get on the cloud within the next four years. And this, in spite of IT budgets that are expected to remain largely flat.

CIOs and IT have been boxed in between modest budget growth and growing legacy requirements,” said Mark McDonald, group vice president and head of research for Gartner Executive Programs. “New lighter-weight technologies – such as cloud computing, software as a service (SaaS), and social networks – and IT models enable the CIO to redefine IT, giving it a greater focus on growth and strategic impact. These are two things that are missing from many organizations.”

In conclusion, cloud computing can save you big money, and it is this particular point that will drive its growth in future.

After all, “It’s all about the money, honey.”

By Sourya Biswas

sourya

Sourya Biswas is a former risk analyst who has worked with several financial organizations of international repute, besides being a freelance journalist with several articles published online. After 6 years of work, he has decided to pursue further studies at the University of Notre Dame, where he has completed his MBA. He holds a Bachelors in Engineering from the Indian Institute of Information Technology. He is also a member of high-IQ organizations Mensa and Triple Nine Society and has been a prolific writer to CloudTweaks over the years... http://www.cloudtweaks.com/author/sourya/

3 Responses to How Cloud Computing Can Save You Money

  1. Saving money is always an important factor in corporate decision making but it is rarely the driver. *Any* properly implemented current technology will provide cost savings over older systems. The drivers are going to be time-to-market, customer churn, new business segments, customer satisfaction, etc.

    The economics angle is going to be what my first sales trainer called, “Go fasters.” They don’t close the deal but they make the deal go faster. Trying to close the deal based solely on economics (against a competitor with a similar offering) only results in a price war.

Comics

At CloudTweaks, we're plugged into the cloud, the internet of things and all that the web has to offer. From wearable technology, to mobile computing, cloud computing and big data, CloudTweaks is your source for updates and news on the most innovative technology.

Popular

Top Viral Impact

Cloud Infographic: Cloud Computing Growth

Cloud Infographic: Cloud Computing Growth

An excellent infographic provided by AwesomeCloud which predicts a continued high level of growth in the cloud computing industry. Potentially staggering numbers for Public Cloud IT Services of $100 Billion by 2016. Infographic Source: AwesomeCloud About Latest Posts souryaSourya Biswas is a former risk analyst who has worked with several financial organizations of international repute, besides being a…

Cloud Infographic: Cloud Public, Private & Hybrid Differences

Cloud Infographic: Cloud Public, Private & Hybrid Differences

Many people have heard of cloud computing. There is however a tremendous number of people who still cannot differentiate between Public, Private & Hybrid cloud offerings.  Here is an excellent infographic provided by the group at iWeb which goes into greater detail on this subject. Infographic source: iWeb About Latest Posts souryaSourya Biswas is a…

Cloud Infographic: Most Used Cloud Apps

Cloud Infographic: Most Used Cloud Apps

Cloud app and analytics company, Netskope released its quarterly Cloud Report. The new report reveals that enterprise employees are using an average of 397 different cloud apps (most of which are unsanctioned), when IT estimated they have 40-50 — that’s a tenfold underestimation. Below is an infographic provided courtesy of the group at Netskope which goes into further detail.…

Cloud Infographic – The Power Of Cloud Disaster Recovery

Cloud Infographic – The Power Of Cloud Disaster Recovery

Cloud Infographic – The Power Of Cloud Disaster Recovery Preventing a Cloud Disaster is one thing. Recovering from a disaster is a whole other area of concern. Today’s infographic provided by CloudVelox outlines some best practices and safeguards in order to help your business make more informed decisions. About Latest Posts souryaSourya Biswas is a…

Featured Sponsors

The Internet of Everything Opens Up The World

The Internet of Everything Opens Up The World

Shaping The World With New Technologies As a connected collection of intelligent objects, the Internet of Everything promises to open up those areas of the world hardest hit by economic, political and agricultural blights. Relatively inexpensive devices, paired with revolutionary energy sources and unprecedented access to information offer great promise to farmers and workers in…

Sponsors

Moving To The Cloud: A Smart Move Or Proceed With Caution?

Moving To The Cloud: A Smart Move Or Proceed With Caution?

Moving To The Cloud: A Smart Move Or Proceed With Caution? You hear it over and over again: The future of computing is in the cloud. Businesses should be moving to the cloud. If you’re not in the cloud, you’re behind the times. But trusting your essential data to a cloud may sound like a…

Placement Opportunities - Find Out!

Established in 2009, CloudTweaks is recognized as one of the leading influencers in cloud computing, big data and internet of things (IoT) information. Our goal is to continue to build our growing information portal, by providing the best in-depth articles, interviews, event listings, whitepapers, infographics and much more.

You can help continue to support our community by social sharing, sponsoring, partnering or contributing to this great educational resource.

Contact

CloudTweaks Media
Phone: 1 (212) 763-0021

Join Our Newsletter