Financial Savings Benefits of Migrating to the Cloud

4 Ways Your Business Will Save Money by Migrating to the Cloud

Many businesses are scrambling to find out just what the cloud can mean to their current costs — and more importantly, their bottom line. Common questions resound around how much you can save on your IT spending now and going forward, but the tougher question is how much it can impact your top-line revenue and growth.

In part 1 of this series, you got a 50,000-foot view of what the cloud is. The following week we asked our employees to tell us what the Cloud is in their own words in this video. Now I’m going to share the bottom-line benefits with you – in hard numbers.

Savings #1: The CAPEX to OPEX Shift

Industry analysts have determined that any company migrating to the cloud should expect at least a 50% reduction in spend for IT support services, whether using internal staff or outside contractors/vendors.

moving-to-the-cloud

The primary reasons for the savings is the removal of time and effort to support technologies. When migrating to cloud services, the shift is from spending CAPEX (cash) on hardware, software and services (time) to support those technologies to OPEX (operational) spending on a recurring monthly basis in a “pay as you go” model that is based on actual usage.

Any increase in OPEX monthly spend is more than offset (by at least 50% net) by not having to spend money on staff and resources to keep owned equipment alive, running and in good health.

Savings #2: Less Downtime

The 50% savings we mentioned in the last section doesn’t even address the most expensive of all IT impacts, which is: What does it cost the business when my systems are down?

Although the highest cost by far, most businesses never compute what it costs them per hour when their systems are down. Some estimates for small to medium businesses come in at approximately $25,000 an hour. That is a LOT of money! We have clients today that have computed this number and found it to actually be in the millions of dollars per hour!

So the question is, what is the likelihood of your system going down and for how long when you own and manage it in-house versus using cloud services? The fact is, cloud services are far less likely to have outages and downtime when compared to owning your technology.

In addition, any outage a business has with their owned in-house technology solutions will usually last much longer than compared to a cloud provider. Typically the difference can be measured in days (for owned technology) versus minutes (for cloud services). The reason for this is the sheer magnitude of what cloud providers deploy when compared to what any one business would do for themselves.

Everything a cloud provider does is on a scale infinitely more robust than what a typical small or medium-sized business would be able to afford and carry out. Just the high-level differences are abundantly clear:

  • A server in a closet in your office vs. hundreds of servers in a hardened datacenter
  • One power source vs. multiple power sources directly on the grid
  • Battery backup lasting 15 minutes vs. multiple layers of backup and generators lasting 30 days

The list goes on, but the point is the same. Most businesses cannot and will not be able to afford building these same high-end capabilities for their tiny closet “datacenters.”

Savings #3: Better Human Resource Management

Though most people focus on the cost side of cloud benefits, there are additional benefits that extend to the revenue side of the house. One such benefit is resource shifting.

Many businesses have slapped the IT tag on an employee, even though that employee wears other hats in marketing, accounting or operations. When in-house systems are migrated to the cloud, these human resources can be shifted and re-focused on more value-added processes and tasks to drive business growth. We have seen this happen with many of our clients, to great success.

Savings #4: Improved Productivity

Another area of value affected by migrating to the cloud is employee productivity. It is very common for businesses that own their own systems in-house to allow their software to become aged and stale. We see businesses two versions behind or more on software updates every day. Aside from the technical issues and compatibility nightmares this causes, the business is not able to take advantage of the latest features and benefits built into newer releases.

With cloud services, software licensing and versions are upgraded regularly as a normal course of business, and this ensures every user can take advantage of enhancements. This is something most businesses don’t think much about, but it can be a source of real value in improved processes, automation and workflow. This then translates into greater efficiencies and business growth.

In addition to the benefits of regular technology upgrades, migrating to the cloud has two other massive productivity benefits: freedom from downtime and flexibility of location.

We have witnessed many cases where businesses have gotten so used to regular weekend outages, maintenance downtimes, and system issues with their in-house technology, they have come to think of these disruptions as totally normal. They simply add that downtime into the time they plan for projects. That’s not good! Downtime should not be normal.

When moving to cloud services, the amount of disruptions and outages decrease dramatically. This means users can expect access to systems all the time — and from anywhere. Since they can reliably access the needed technology via the network, users can now work from home as easily and as productively as they can in the office.

This increase in productive capacity has a direct impact on the bottom line. It also means users expect their systems to run perfectly 24/7/365. But the cloud is by no means perfect, and though outages are much, much rarer, they do happen and they may impact users and businesses. The downside is that businesses get spoiled and don’t plan for the occasional cloud service outage. But when you put the cloud into perspective, I believe all the upsides outweigh this downside.

Stay tuned for our next post where I talk about the cloud issue on every business’s mind: security.

>> Part 1, The Challenge of the Century: Defining the Cloud

>> Part 2, We Asked Fluid's Team, What is the Cloud?