There has been a lot of debate over whether or not turning to the cloud can really save companies money … and it’s a discussion worth having. According to Logicalis, an international provider of integrated information and communications technology (ICT) solutions and services, the amount of money a company can save by using cloud services is a moving target. “Everyone’s pointing out that using the cloud means you’ve turned a capital expense into a more manageable operational expense. That is true, and it has significant merit. But it doesn’t paint the whole picture,” says Mike Alley, director of managed services solutions for Logicalis.

According to Alley, the amount of money a company saves or spends in the cloud is directly related to the level of services they employ, the increased operational efficiencies and risk reductions they enjoy as a result, and the ability to meet greater demands from the business units with the more effective IT delivery model. Therefore, according to Logicalis, any discussion about cost savings in the cloud has to first consider the top four ways using the cloud can actually save a company money.

How Using the Cloud Saves Money

  1. Shared Resources: Whether or not the cloud saves a company money is directly related to the level of services provided. Shifting the procurement of capital equipment to a third party will save some money based on the sheer volume of purchases the cloud provider makes and the fact that those purchases are then shared among the provider’s customers. Sharing the cost of basic system management, software installations, and other services, however, can reduce in-house costs even more. Step that up with a provider that offers high-end security and compliance support and CIOs will hit the jackpot in cost savings across the board.
  2. Efficiencies of Scale: A serious cloud provider will have the tools on hand to automate patch, performance and capacity management – tools that are so costly that most businesses skimp on or take a pass on them entirely. But, when the cost is spread among multiple users in a cloud environment, it becomes not only cost effective, but compelling to take advantage of the risk protection that can be offered at a more affordable price point through the cloud.
  3. Business Agility: When a business requires increased capacity to accommodate the needs of a new department or project, delays frequently occur throughout the process of getting a capital budget approved, procuring the equipment, and installing and bringing the new systems up to speed. With a cloud provider, gaining access to additional computing resources is as simple as issuing a change order; it’s the difference between having the requested resources up and ready for service in days versus weeks or months and paying for it through a slightly higher monthly operational cost instead of a significant up-front capital expense.
  4. Same Equals More: What is the value of risk reduction? What if the IT department ran smoothly every day; patches, security and capacity issues were outsourced problems; and IT personnel could actually focus on advancing the business’ productivity goals rather than being firefighters? This is exactly what happens when businesses outsource everyday IT functions to a qualified cloud provider and have a well-defined SLA in place. The Catch 22 here is that, when things in IT go this well, demand for IT services may increase, which may diminish operational cost savings, but increase reliability and business productivity overall.

“When I talk to clients about the cloud, I don’t focus as much on whether or not we can save them a few dollars in operational costs monthly – even though we can,” Alley says. “I ask them, ‘Is it more important for me to show you a reduction in overall costs, or is it better for me to increase your availability, significantly reduce your risk, and increase your value to your company while maintaining your current expenditure?’ Invariably, they choose the latter. That doesn’t mean the cloud isn’t also saving them money. It means they’re getting the concept of choosing to eat filet mignon for beef stew prices.”

About Logicalis
Logicalis is an international provider of integrated information and communications technology (ICT) solutions and services founded on a superior breadth of knowledge and expertise in communications & collaboration, data center, and cloud computing and managed services.