- June 14, 2018
- Posted by: TecFac Team
- Category: Finance & accounting
There are many reasons why your company might want to move to the cloud. One of the biggest reasons to consider moving workloads to cloud-based platforms is to reduce costs.
It can refer to many different things such as storage, networking, web page hosting, email hosting, etc. The point is that it moves hardware and/or software from being located on premises or in a datacenter relieving the management burden from internal IT staff, so the business can focus on its core competencies.
Here are five ways “moving to the cloud” can help your business save money:
1. Less hardware to maintain
By moving apps and services to the cloud, there are fewer servers on premises requiring internal resources or contractors to maintain. Fewer patches, firmware, and hardware malfunctions to deal with free up IT staff to focus less on operations and more on projects that provide value to your organization. Before cloud-based email it required on-premise email servers that were costly, frequently needing patches and updates, and required IT staff to monitor, maintain and upgrade the environment. None of that is necessary in a hosted cloud-based environment, and it can be managed any member of your IT staff regardless of expertise.
2. Lower electricity costs
Because of economies of scale, cloud computing uses less electricity. Better hardware utilization means more efficient power use. Typically, when you run your own servers, they are underutilized. Cloud providers are much better at forecasting and allocating resources than the average business. Therefore, a cloud service provider can charge you less for energy used than what you spend on premises or in your own data center. It is no longer necessary to spend thousands a month on data centers and server room to keep hardware up and running.
3. Lower staffing costs
Staffing budget usually makes up the largest part of an IT budget. Often it is more than half of the total. Experienced IT staff can be expensive. Salaries, benefits, and other employment costs often times outweigh the cost of hardware and software. In most environments its required to hire staff with high level expertise in server maintenance and management of multiple platforms. This type of talent can be very expense and is no longer necessary in a cloud environment. Mid level IT staff can manage the environment from a central portal with little training.
When you move to the cloud, a portion of the money you pay for the service goes to the provider’s staffing costs. Again, because of economies of scale, it’s typically a much smaller amount than if you did all that work in-house.
4. No capital costs
With cloud computing, capital expenditure costs shift to operating expenditures. Even if your accounting amortized capital costs over several years, the money for those servers still must come from somewhere. Often that capital comes at the expense of employee raises, bonuses, or other investments. In a cloud based environment you are only paying a monthly fee per user than can scale up or down depending on your need. If you are a small growing business you can get your entire IT infrastructure provided via the cloud in minutes of creating an account. Email, file storage, and even your phone system can be setup the same day you purchase the services.
5. Resilience without redundancy
When you manage your own servers and other hardware, you need to buy spare parts and sometimes even redundant systems to protect yourself in case of failure. Depending on the criticality of certain servers, you may even need to duplicate them. These costs can quickly add up.
Typical cloud service providers have multiple locations for their data centers, and they often times mirror your data and applications across at least two of them. The redundancy and disaster recovery is already there and built into the monthly fees of the services. It’s more cost effective up front and in the long run as redundancy and backup is not a task you have to deal with.
Cloud computing is now a mainstream alternative for companies of all sizes. Moving to the cloud will save you money, and allow you to focus on growing your business and not your IT footprint. If you would like to learn more about what cloud solutions can help improve your business and reduce your IT expenditure, feel free to contact us today.