The world is moving to the cloud. In 2020, more than 60% of digital business processes will be supported by some type of cloud initiative. This means that organizations are starting to move their infrastructures into the cloud.
While there are several compelling reasons to move to the cloud, for many companies, the primary motivator is cost savings. According to Forrester Research, transitioning from in-house IT infrastructure to a cloud solution can save an organization between 25% and 55% on their technology spend. The benefits aren’t just financial though; there are operational advantages that come with the cloud as well.
Cloud computing has proven itself beneficial to companies looking to save on infrastructural costs, improve their operational efficiency and responsiveness, and help drive business outcomes. For example:
Lowering Costs of Infrastructure
One of the most common reasons for organizations adopting a cloud model is cost savings. According to a report by Gartner, the cost per unit of infrastructure provisioned is lower in the cloud than it is on-premises.
Using an average percentage of savings across all industry sectors, Gartner calculates that the saving ranges between 11% and 54%, depending on which component (CPU, storage, or RAM) is being measured. The range is so wide because the amount saved varies according to slabs of infrastructure being provisioned, as well as local market conditions.
Improved Operational Efficiency and Responsiveness
The next reason for organizations adopting cloud models is increased operational efficiency. According to Gartner, companies are realizing a 10x improvement in their IT agility by moving to a cloud model.
Cloud infrastructure enables teams to get access to infrastructural resources at a moment’s notice. Gone are the days when IT teams had to wait for weeks, sometimes months in order to acquire the hardware they needed in order to implement a change in business processes or product functionality. With a cloud service provider, a company can subscribe to a particular service and have the required infrastructure provisioned in just a matter of minutes. According to Gartner, this improved agility allows companies to reduce their technology maintenance costs by as much as 50%.
In addition, cloud solutions are usually highly standardized, which means they are relatively easy to set up and maintain. This makes it significantly faster for companies to get their business systems online. In addition, this standardized infrastructure allows businesses to scale easily and quickly in response to changes in demand.
Offloading Non-Core Tasks/Resources
To stay competitive, organizations need the ability to respond quickly and effectively to market pressures. This can be a challenge however when your IT team is bogged down by tasks that are not related to your organization’s main business goals.
One of the benefits of the cloud is its ability to help companies offload non-core laborious tasks so that their IT staff can focus on higher-value work, like automation and innovation. With a cloud solution, companies can also take advantage of economies of scale by tapping into shared infrastructural resources. This means they are able to get access to the computing power and storage capacity that they need without having to set up all of their own IT infrastructure.
Increased Security and Data Protection
Security is an important consideration for companies looking to adopt a cloud model. Initially, many businesses were concerned that moving to the cloud would mean increased risk because their data and other corporate assets would be hosted off-premise. However, this is a misconception.
In fact, companies that move to a cloud model usually see an increase in security because they have more control over their infrastructure. For example, businesses using a cloud pak from verteran company IBM can benefit from direct access to a team of security experts who can help them secure their data and applications. Migrating to a cloud also means that organizations have access to a wide range of tools for securing their data, as well as incorporating encryption into their business processes.
Lower Total Cost of Ownership (TCO)
The final reason why companies are adopting cloud models is that they deliver a significantly lower Total Cost of Ownership (TCO). The overall TCO of a cloud solution is made up of expenses such as implementation and running costs, as well as the cost for developing and testing applications. According to Gartner, moving to a cloud model can reduce your TCO by 30-50%.
This is primarily because cloud solutions offer significant economies of scale for organizations. In addition, companies also have to factor in the time and money that they would have spent implementing their own infrastructure solution in-house.
By moving to a cloud model, companies no longer incur capital expenditures (CAPEX) the way they used to when buying hardware and software licenses directly from vendors. Instead, they pay a subscription fee to use cloud software and infrastructure on an as-needed basis.
Theoretically, the only additional cost is related to maintaining your application’s interfaces or APIs for integrating with other systems. You will also need to allocate some resources for developing new features and functionality that you never had before so there may be some additional costs there. The point is that the fixed costs of running your own data center are eliminated, which means it’s easier to calculate your TCO.