Cloud Cost Savings Basics

Many businesses have found themselves faced with making some hard choices due to the recent economic conditions.  It can be a struggle for small- to medium-sized businesses to keep current with the ever-changing face of technology.  In 2011, Gartner Executive Programs surveyed more than 2,000 CIOs worldwide and found that most CIO’s business’ priorities were striving to increase growth and reduce costs, and they were looking at cloud computing as a way to achieve their business goals.

Table 1
Top 10 Business and Technology Priorities in 2011

Top 10 Business Priorities
Ranking Top 10 Technology Priorities Ranking
Increasing enterprise growth

1

Cloud computing

1

Attracting and retaining new customers

2

Virtualization

2

Reducing enterprise costs

3

Mobile technologies

3

Creating new products and services (innovation)

4

IT management

4

Improving business processes

5

Business intelligence

5

Implementing and updating business applications

6

Networking, voice and data communications

6

Improving technical infrastructure

7

Enterprise applications

7

Improving enterprise efficiency

8

Collaboration technologies

8

Improve operations

9

Infrastructure

9

Improving business continuity, risk and security

10

Web 2.0

10

Source: Gartner EXP (January 2011)

97% of small- to medium-sized business (SMBs) that are utilizing cloud computing in some form report they got what they wanted in terms of cost savings.  According to Newtek’s SB Authority Market Sentiment Survey, only 20% of SMBs are embracing the benefits of cloud computing solutions.  Does that surprise you?  How can 97% organizations doing business in the cloud realize savings, yet only 20% of business owners believe doing business in the cloud can save them money?

Breaking it Down – Cloud Cost Savings Basics

1.  Servers – Corporate servers have utilization levels of around 15%.  A server has a life cycle of 3 years, and 50% depreciation right out of the box.  Operating at only 15%, it will take much longer than 3 years for you to see a return on your investment.  For many SMBs investing in servers is not a wise financial decision.  Cloud computing alleviates the need to invest in expense equipment, as well as, software licenses.

2.  Pay-as-you-go Model – Your subscription rates are based on your number of users accessing the hosted applications of your choice.  New users can be added with short notice, and its scalability is designed to fit your needs.  Users can be added one at a time as the need arises.

3.  Focus of IT Department – If all your IT resources are in-house, your IT department is spending all its time and resources on equipment maintenance, new software installs, software updates, etc.  Without these responsibilities weighing down your IT department they can shift their focus on innovation, on strategic initiatives, on projects that will positively impact your bottom-line.

The financial benefits of cloud computing are not restricted to strictly cost savings. Doing business in the cloud also frees up your talent to focus on making money for your organization.  Have you made the switch to the cloud?  If not, what is holding you back?

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