How Cloud Computing Saves Money

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How Cloud Computing Saves Money

September 12, 2018 Cloud Computing 0
OPEX vs CAPEX

Two Factors

Cloud Computing does not always save every business money in every situation but Cloud Computing does offer significant benefits for many enterprises. This is due to two factors. The first is based on the economic principle called ‘Economies of Scale’. It means that it’s much cheaper for Large Enterprises like Microsoft to build and maintain the underlying technology and your smaller business can just rent what it needs as it needs it. Secondly, using on demand cloud IT resources helps your business shift IT costs from a Capital Expense (fixed cost) to an Operating Expense (variable cost). This means that you can quickly and easily scale your resources to meet the new demand.

Self hosting is expensive

A great example of such a need is Email services. Many larger companies will run a Microsoft Exchange email server. This can be a very costly endeavor. The first thing you will need to buy is the physical hardware itself. If you are a good IT Executive you will likely buy an IT environment that has some redundancy built in so that in case of hardware failure you don’t lose your email server. You will also need to consider redundant internet connections. That way your email service doesn’t go out suddenly. Next you need to purchase the software and proper licenses so that all your employees can get their email. Lastly you will also need to hire enough IT guys to be able to support and maintain your new Email service.

All of that previous work is first going to be estimated by your IT manager beforehand. You’ve made a capital investment once you purchase the needed equipment. This is now a fixed cost with a depreciation schedule. If your demand changes rapidly, you end up overpaying or having to buy more to meet demand.

Cloud Computing is simple

Going with a cloud email service can alleviate all of that hassle and replace it with a variable month to month charge that can quickly scale to meet your needs. It will prevent you from overpaying for any IT needs and simplify your environment while at the same time providing more security, redundancy and availability than other options. This is just one example of one way a cloud service can save your company money. So why wouldn’t you use it?