How chief information officers can realise cloud cost savings
To effectively measure the cost benefits, IT decision makers must identify the cloud's short- and long-term advantages.
Recent research by Coleman Parkes released in November indicates 74% of IT decision makers and chief information officers (CIOs) expect to see cost savings when they embrace the cloud, but just 41% believe they actually achieve these savings.
The benefits of cloud have been well-publicised, but there's clearly not enough being done to put a cost value on these, and to work with IT decision makers to take advantage. Cloud is a great asset to any business, but it needs to be quantifiable. By following a systematic approach to identifying and measuring cloud's short-term and long-term benefits, IT decision makers can measure the cost benefits of cloud.
One of the most significant advantages of the cloud is the ability to scale up and down on demand with businesses' requirements. For companies that cater for large seasonal demand, cloud enables organisations to pay as they use, without having large systems sat idle.
These cost benefits may not always be apparent. When initially budgeting for a new system, factor in the cost of each capacity upgrade in the future, for both cloud and other alternatives. That way, as storage needs increase, the costs can be measured against the cost that would have been incurred if upgrading physical storage.
Building a data centre is like buying a new car, the minute you drive it off the forecourt it starts depreciating and is quickly superseded. By hosting data in the cloud, users have access to the most advanced technology that's constantly updating. Again, long-term financial planning is required to compare the cost savings of cloud with the lifespan of a traditional data centre, its upgrades, and renewal.
It's not just the initial cost of buying the hardware for a data centre, there's the cost of the space, powering, cooling and technical support required to run it. This makes calculating the cost of running a data centre harder to factor, but scaling it down to an equivalent monthly cost can make it easier to compare to cloud.
Cloud also has the advantage of freeing up IT departments from basic administration and support tasks. This allows them instead to concentrate on analysing the data to inform decision makers and help businesses to innovate. This can be measured using timesheets and is a more productive and a smarter way of working.
Testing and development
Cloud has substantial advantages to companies running data centres for testing and development. These centres are often required to be full size and spec, and incur large running costs. Cloud allows for virtual testing spaces to be created that have the ability to be turned on and off and scaled up and down on demand. Again a monthly saving can be worked out by comparing both the monthly running and equipment costs with the future cost savings of mitigated system upgrades.
Looking towards the future
Cloud service providers must do more to work with businesses to help them realise cloud cost savings. It's important to consider both the short- and long-term benefits of moving to the cloud compared to constraining alternatives.
Cloud has many advantages beyond cost savings, including the cultural benefits of flexible working and the freedom to innovate. By identifying the benefits, and creating a plan to measure these against the cost of alternatives, organisations can create a personal plan for measuring cloud financial benefits.
Businesses must look to the longer-term benefits and autonomy that cloud has to offer. The cost savings of cloud aren't all about the quick win, rather they're about finding the most effective and efficient solutions so companies can realise their long-term ambitions.