The Lighter Side Of The Cloud – K.I.S.S
The Lighter Side Of The Cloud – #NerdLove
The Lighter Side Of The Cloud – The Crash

How Cloud Computing Can Save You Money

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.

Save You Money

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/

One Response 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.

Support

Recent

Beyond Gaming: Three Practical Applications For Oculus Rift

Beyond Gaming: Three Practical Applications For Oculus Rift

Three Practical Applications For Oculus Rift  Since the announcement of the Oculus Rift in 2012 gamers and game developers alike have been frenzied trying to both get their hands on the unit or build their own proprietary VR machine. The VR gold rush has since lead to the announcement of Project Morpheus from Sony and…

The Lighter Side Of The Cloud – Due Diligence

The Lighter Side Of The Cloud – Due Diligence

By David Fletcher Please support our comics by sharing, licensing or visiting our cloud sponsors (Below). Your support goes a long way in allowing us to continue to produce our lighthearted comics each week.   About Latest Posts souryaSourya Biswas is a former risk analyst who has worked with several financial organizations of international repute,…

Popular

Cloud Infographic – Monetizing Internet Of Things

Cloud Infographic – Monetizing Internet Of Things

Monetizing Internet Of Things There are many interesting ways in which companies are looking to connect devices to the cloud. From the vehicles to kitchen appliances the internet of things is already a $1.9 trillion dollar market based on research estimates from IDC. Included is a fascinating infographic provided by AriaSystems which shows us some of the exciting…

Cloud Computing Services Perfect For Your Startup

Cloud Computing Services Perfect For Your Startup

Cloud Computing Services Perfect For Your Startup Chances are if you’re working for a startup or smaller company, you don’t have a robust IT department. You’d be lucky to even have a couple IT specialists. It’s not that smaller companies are ignoring the value and importance of IT, but with limited resources, they can’t afford…

5 Surprising Ways Cloud Computing Is Changing Education

5 Surprising Ways Cloud Computing Is Changing Education

Cloud Computing Education The benefits of cloud computing are being recognized in businesses and institutions across the board, with almost 90 percent of organizations currently using some kind of cloud-based application. The immediate benefits of cloud computing are obvious: cloud-based applications reduce infrastructure and IT costs, increase accessibility, enable collaboration, and allow organizations more flexibility…

Why Hybrid Cloud Delivers Better Business Agility

Why Hybrid Cloud Delivers Better Business Agility

Why Hybrid Cloud Delivers Better Business Agility A CIO friend of mine once told me that a hybrid cloud model enables him to “own the base, rent the spike” when it comes to unplanned events. Let’s face it – maintaining unused infrastructure for rare or random IT events is expensive and unnecessary in a cloud…

5 Mistakes That Adversely Impact Seamless Cloud Migration

5 Mistakes That Adversely Impact Seamless Cloud Migration

There is absolutely no doubt migrating a section of your IT assets, non-core business processes or the entire spectrum of business systems to the cloud makes immense sense. There are plenty of business benefits linked to cloud computing; most astute businesses are using cloud computing in some capacity or other and if you aren’t doing…

Sponsored Posts

How To Keep A Cloud (And Your Data) Inside Your Borders

How To Keep A Cloud (And Your Data) Inside Your Borders

The Cloud And Your Data One of the greatest challenges for companies considering a move to the cloud is in its very global and seemingly borderless nature. As an Internet-based technology, it is easy to assume that any data sent from A to B can take any one of a thousand paths, routed through cities…

Cloud Logo Sponsors

hp Logo CityCloud-PoweredByOpenstack-Bluesquare_logo_100x100-01
cisco_logo_100x100 vmware citrix100
Site 24x7


Contributor Spotlight

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.

Branded Content Programs

Advertising