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5th July
Costing the Cloud: Financial Benefits of Moving to Cloud Computing
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So they say Cloud brings about economies of scale – and most of us probably won’t know what that is, because we’ve never had to know. But as cloud solutions become increasingly mainstream, it’s no longer an option to miss out on this powerful computing tool.

Economies of scale is a decrease in costs in proportion to increased productivity. Or, in simpler terms, spend less and get more. To attain economies of scale, resources should be maximized. The demands that resources that IT infrastructure place on the business can amount to quite a fair bit – here’s how you can mitigate that by moving to cloud computing.

Hardware and Utility Costs

To ensure that you’re fully utilizing your hardware is challenging. There will always be a gap between usage and the hardware’s capacity. In underutilizing the resource, cost is incurred for no good reason. Power costs ramp up when you have to keep your servers running all the time. For maximum uptime, many companies also buy more hardware than they need in case of failure. These are left lying around “just in case”. These are expensive ways of maintaining strong IT infrastructure - money could be spent on expansion, regional growth, launching a new product.

Maintenance Costs

In addition to the costs of purchasing hardware, maintaining your own setup could cost you an additional 20% on top of your yearly infrastructural expenditure. Servers are also high-maintenance in that they are sensitive to heat, humidity and dust – to simply upkeep these would take many hours of effort by a dedicated technician. Fireproofing is also crucial for protecting your data and servers. More than that, with the rapid speed of technological evolution, it would be wise to future-proof your equipment by setting it up in a configuration that allows for newer equipment to be installed with minimal effort. You can save on all of these costs by deploying cloud solutions. With a central, well-maintained data centre looked after by specialists and technicians, you can be rest assured that your data is safekept within machines that are much less likely to fail on you.

Financial Cost

When you choose to maintain your own infrastructure, your costs are all upfront, from buying hardware to hiring professionals to take care of them. Yes, it’s true, accounting magicians can use their amortization hat-trick to make it seem like cost is spread out over hardware lifetime, but it’s still out-of-pocket capital that can’t be invested or spent by the business elsewhere – when you really could keep that money, pay on a subscription basis, and not risk opportunity cost. This is also known as OpEx (operating expenditure), where you only pay for as much as you use. This gives you agility - if you need to use less units that particular month, just scale down, and if you need more units that month, just pay for those. In business where speed is paramount, it's important to build processes and use tools that allow us flexibility to make decisions and execute them in the fastest possible time. Cloud computing can help with that.

Opportunity Costs

As the business expands, your solutions need to grow along with it. With cloud solutions rather than forking for additional new hardware, an overhaul of infrastructure, or paying an external party to handle the integration for you, you simply top up for your usage. This is easy on cash flow and gives you extra leeway every month to invest in more worthwhile ventures. To add to that, implementation will also take up time - though physical setups can take anywhere from a week to a month, with cloud computing, you can upgrade and have your applications on the cloud within 24 hours. The extra speed afforded to you will enable you to execute business processes with maximum efficiency. For example, if you're rushing to go to market with a certain product, the ability to have your customer relationship management (CRM) or enterprise resource planning (ERP) software up and running within 24 hours could well prove to be invaluable.

At the end of the day, it really depends on what architecture or infrastructure your business requires. There are many benefits to cloud, and with the variety of commercial cloud options there are, you'll surely find one that will not only meet your requirements but go beyond that to power your business performance. Cloud computing is often dubbed the ‘future of computing’, so whether or not you end up choosing traditional methods of computing over cloud, ultimately, it’s worth a try.

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