How Cloud Computing Can Reduce Costs?

Published: 25 July 2016

Even with the rise in popularity of cloud computing in the past decade, there are still a lot of cloud myths doing the rounds causing uncertainty. In this series of blogs we aim to debunk common cloud myths, to help you make a better informed decision. Here we look at the cost of cloud, and identify if it really is a cheaper option.

How can cloud computing save money?

Cloud computing can save you money by allowing you to replace the traditional and often expensive on premise systems with more scalable IT services, usually available as a pay-as-you-go model.  This means you can select specific services according to your needs, rather than buying your IT architecture outright.  Longer term however, you could pay the same or, in some cases, more. One thing is for sure, by looking at the bigger picture it’s clear you will get ‘more bang for your buck’ in terms of benefits and functionality.

Cash flow

When you migrate your IT infrastructure (in whole or in part) to the cloud, you remove the need for on premise servers. Servers and hardware are depreciable business assets, or capital expenditure. Whereas, the Cloud uses a subscription pricing model, which makes is an operational expenditure. By moving from CapEx to OpEx you can improve your cash flow – there is no up front payment and instead you pay monthly (or sometimes quarterly) for the compute resource used; with full visibility you are incomplete control of your outgoings.

Pay for what you use

Cloud is a scalable solution, meaning you can increase or decrease compute resources based on your business needs – only paying for what resources you consume. This makes it ideal for businesses experiencing growth or those that have seasonal fluctuations. In contrast, with on premise solution you buy the hardware up front, which means you need to provision for your future resource requirements, which can be expensive. For many businesses the flexibility that comes with the cloud is extremely compelling.

Cost savings

By choosing to move to the cloud, you can benefit from significant cost and time savings, both in terms of overheads (such as electricity) and resources (by reducing the need for in-house IT expertise). In a recent study by Forbes, 62% of respondents stated that cloud computing has enabled their organisation to invest more money back into their business.  So although it may seem slightly more expensive over time, it’s important to consider the money that could be saved and invested in the long term.

Customer Insight

Ratio Vending (an Xperience Group customer) Manager, Andrew Steen explains, “Moving to the Cloud was going to be slightly more expensive than remaining with a physical server. But once we began to look at the bigger picture i.e. planning to remove any inefficiencies, it made sound business sense to move sooner rather than later.”

He adds “We looked at things like: could we afford the time, worry and investment that would be needed to keep our ageing IT infrastructure up and running for another year? When we weighed it all up, it made sense to make the move now.”

The bigger picture

Ultimately, when it comes to cost, it’s important to look at the bigger picture when considering a cloud migration and consider the benefits it could bring to your business, including; lower overheads, scalability and lower capital expenditure.

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