Sure, Cloud Services Can Save You Money—But How?
by Mark Adams, on 27-Aug-2015 14:00:00
“Cloud services can save you money.”
That’s a statement virtually everyone agrees with. But when it comes down to ROI, not everyone knows how to break down the costs and benefits of the cloud in a way that shows exactly what your return will be.
To really understand the ROI of cloud services, you need to look beyond dollars and focus on the intangible things—things that can’t exactly be measured, but provide tremendous growth and opportunity for your business.
Here are just a few of the many things cloud computing can do for your business that make it worth the investment.
No More “Worst Case Scenario”
In the past, companies used to buy IT based on the worst case scenario. You had to invest in a resource upfront and guess at how much of it you would need over a 3-5 year period. Then you’d buy that amount all at once—even if you never actually ended up fully using it.
With cloud services, everything is elastic. You can buy exactly what you need right now, and have the freedom to scale it up or down, depending on how your needs change in the future. If your services are managed carefully, you can virtually eliminate wasted resources—and there is massive value in that.
No More Vendor Lock-In
Before cloud services, companies would buy an IT service by licensing from a vendor. That meant you were essentially “trapped” in an agreement with that vendor until you were done writing off the initial investment. It took a very brave company to spend thousands of dollars with a vendor upfront, only to realize their service didn’t work, and then turn around and spend the same amount of money with another vendor—but it happened all the time.
Now, software as a service (SaaS) companies and cloud services allow you to try a solution to determine whether or not it will work for your company. If you find that a service doesn’t do exactly what you want, you can switch to another vendor quickly and easily. This reduces the risk of making a costly mistake.
Other ROI Benefits
Reduced Disaster Recovery
Because IT services used to come from a single vendor, you were dependant on that vendor’s security. If something were to go wrong with a part of their service, all of your data within that service was potentially at risk.
Today, cloud providers make investments in redundant data centers and backup policies, so if something goes wrong, your data is safe. And because you can have multiple vendors for each of your solutions, a problem with one won’t mean a problem with all—not all of your eggs are in one basket. This greatly reduces the amount of your data at risk.
Reduced Capital Expenditure
If your business has a bank account full of money, do you want to spend it all upfront on a bunch of hardware? Probably not—there are other things you could use the money for, and you’d probably like to save for operational expenses down the road.
With cloud services, that’s exactly what you can do. Switching to pay-as-you-go models (a.k.a. SaaS models) helps you accrue savings by going from capital expenditures (CapEx) to operating expenditures (OpEx). With CapEx, the full cost of the service is covered right away, but the expense of the asset depreciates over time. With OpEx, the expense can be deducted as needed, helping you utilize your money more efficiently.
Another benefit that adds to the ROI of cloud services is the fact that they can be deployed instantly. This saves the company huge amounts of money when compared to the slow, drawn out deployments of the past.
Because services can be implemented instantly and you’re never locked into a vendor, companies can now experiment with far fewer risks—both internally and in the marketplace. You can easily shut down resources associated with your experiments that don’t work out, and spend the money you were using to fund new ideas. It’s much cheaper to experiment when you don’t have a long-term commitment—this allows companies to be more innovative in their thinking.
A New Way Of Doing Business
As you can see, cloud services offer an entirely new way of doing business. Companies who use the cloud can solve problems faster, implement new tools easily, and experiment with new processes without worrying as much about a negative outcome. If things don’t work out, you have the freedom and flexibility to try something new.
All of these things come together to create a tremendous return for your company—one that includes money, and so much more.