The Costs of Cloud Computing

Cloud Computing Can Help You Realize Savings
by: George Hadjiyanis

Simply speaking, the concept of cloud computing allows you to forget about the size, the scalability, the usually large capital investment for your hardware infrastructure. It may be difficult to grasp the sheer potential of cloud computing. In its very basic form, it eliminates the boundaries imposed by budget limits or technical know how for smaller organizations.

While straightforward economics rarely determine the true design process, the question of how specific “cloud financials” represent potential savings for the purchasing organization are nevertheless important. One needs to be sure that they will save valuable resources in the medium to long-term, in addition to gaining efficiencies in terms of its IT operations and performance benchmarks.

Traditionally, an organization has relied on external hosting solutions to handle its data accessibility and distribution needs or building this massive, complex, and expenses infrastructure itself. The traditional IT services are inherently inflexible.

It has been difficult to deal with spikes and troughs in data needs, according to a client’s complex operations or the quick movement of seasonal buying. It has been necessary for a company to deploy viable resources, both human and otherwise, to ramp up an additional capacity. This is now revolutionary as cloud computing can even help an organization be able to establish needs for its growth in order to increase capacity within a short amount of time. Cloud financials make a lot of sense when you consider what cloud computing replicates and seeks to make redundant.

Quite simply, the company needs not worry about hardware complexities any longer, human capital, or pure operating capital. By definition, cloud computing has data which is managed, stored and distributed across a hardware resource network which is infinitely scalable.

The reality of cloud financials is such that an organization can cut its costs in these areas by, in some cases, as much as 80%. Essentially, none of which are is the concern of the purchasing organization of the cloud computing resources.

The worry of downtime caused by asset failure is negated when cloud computing solutions are adopted. Through strategic selection, an organization will work in tandem with a cloud computing management partner, ensuring that any such asset failure “in the cloud” somewhere is irrelevant to the security and ongoing operation of its business.

If an organization is reliant on self-hosted, managed, and purchased IT solutions and hardware, it must realize that the sheer logistical issues associated with the procurement, installation, commissioning, and subsequent operation of these assets is hard to justify against the cloud benefits. Cloud computing allows an organization to gain access to the power of these assets within minutes and, of course, saves the significant capital costs associated.

At any given time when a company needs to make a capital investment, it would never be certain that whatever was purchased would be 100% used at its optimum. This level of risk may have been historically acceptable, but cloud financials point to a much more sensible solution.

Depreciation may be viewed as an accounting headache and it can often mean the difference between complete visibility and understanding of a project purchase. Cloud financials do not recognize the need for depreciation, as assets are paid for, on an “as needed” basis.

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