Am I saving money by going to the cloud?


Still confused over whether you actually save money by going to the cloud? You’re not alone. The cost-savings from cloud computing debate often gets sidetracked into how useful the technology is. To stay focused on the question at hand, it can help to use a non-tech analogy.

Want to answer the cloud cost-effectiveness debate once and for all? Let’s talk pizza.

Control, Cost, and Value

A concept first put forth by Google Principal Architect, Financial Services, Albert Barron, during his time at IBM, this unlikely comparison is not as crazy as it sounds. Barron’s reasoning presumes there are basically four ways people get their pizza fix:

  1. Make it from scratch.
  2. Buy a take-and-bake version at the market.
  3. Have one or two delivered.
  4. Head to a favorite pizzeria and dine out.

On-premise networks are a lot like option #1. They require the maximum amount of work and investment, but you also get to maintain total control.

Infrastructure as a service (IaaS) is similar to option #2. You don’t need to buy individual ingredients, but you still have to bake the pie, provide plates and napkins, and clean up afterward. Opting for delivery? That’s a lot like platform as a service (PaaS), where there’s no baking on your part, but you still do a little bit of setup and cleanup at home.

Software as a service (SaaS) is like going to a restaurant. You do the least amount of work, and you pay someone else to serve you and wash the dishes! Thinking of this analogy when weighing whether to invest in cloud services helps because it gets you to think about control vs. value.

So, Is The Cloud Really Cheaper?

In truth, when you consider the solution task for task, cloud computing is more expensive. Where you save money with cloud services, though, is in the long-term, particularly in terms of ownership. You also get greater flexibility, scalability, and faster data recovery.

Five crucial ways cloud services save you money are:

1. Reduced equipment costs

If you’re doing everything in-house, you need to buy the equipment needed to do it. This typically includes computers, monitors, software, data storage, and more. With a cloud system, many back-end features like data storage and security are included in the cost. All anyone in your organization needs to access the cloud is a computer and a reliable Internet connection. You can save significant amounts of money by not investing in, updating, and maintaining an extensive IT infrastructure that’s used in traditional terminal-based systems.

2. Maintenance and updates

Unlike in-house systems, regular maintenance and updates are all taken care of in your monthly plan with the cloud. This can be extremely beneficial for SMBs who either don’t want to invest in an in-house IT department or don’t have the financial resources to do it. With a cloud solution, you get the advantages that come with a team of full-time, experienced IT experts at a cost far less than bringing in full-time staff.

3. Scalability

The ability to scale up or down without incurring massive costs is one of the most appealing features of cloud platforms for SMBs and startups. As they grow, many businesses struggle with taking on more staff, which also puts stress on their internal IT infrastructure. The required hardware and software upgrades typically lead to higher costs, not to mention budget overruns. With a cloud-based system, scaling up or down isn’t a problem. You simply add and remove users whenever you need to.

4. Simplified pricing

Most cloud-based systems come with straightforward subscription-based pricing models. You pay a regular monthly fee, which makes cost prediction and budgeting much easier. With on-premise services, it’s often difficult to predict costs from month to month, as unexpected issues and upgrades frequently appear, usually at the worst possible times.

5. Drive your business forward

A recent McKinsey report found that 75% of the cloud’s predicted value comes from boosting innovation. The domino effect of the previous four cost-saving results is that you end up with more resources to invest in growing your business. You’re empowered to move your business further faster by increasing its visibility. And that translates into increased profits.

On-Premise, Cloud, or Hybrid?

To drive down costs and still maintain a level of control, some organizations are investing in hybrid cloud solutions that reduce deployment costs and streamline daily management. For companies trying to decide which infrastructure is the right fit for them, a hybrid approach that relies on both on-premise computing and cloud-based solutions can be the ideal choice. It’s particularly appealing to companies with high-level security and compliance needs and who are put off by the many publicized cloud cyber breaches. For the, a hybrid cloud solution brings together the best of both worlds.

Making the Right Cloud Choice for Your Business

It’s estimated some 80% of SMBs use some level of cloud computing. In many ways, the cloud has become like any other utility service businesses spend money on. The cloud provider handles all the hardware, software, and maintenance aspects, while you get everything you need when you need it.

Though it’s true the upfront costs of migrating to the cloud can make it seem more expensive, most businesses ultimately save money by avoiding huge capital investments in new storage devices and other on-premise hardware upgrades. Additional cost savings can reveal themselves in other areas of your organization, too. There’s no need to manage physical infrastructure, and improved workflow efficiencies that drive revenue and profitability are not uncommon.

As the billionaire CEO Warren Buffet likes to say, “Price is what you pay; value is what you get.” As our pizza analogy illustrates, each solution has its advantages and disadvantages. It’s up to you to decide if the higher cost of going to a restaurant is a fair trade-off for not having to do any of the work yourself.

Managed cloud services support growth while enabling your organization to trade capital costs for variable expenses. Whether you’re keen to free up some cash to invest in your business or are just looking for new ways to reduce regular costs and streamline your business’s finances, moving to a cloud-based system is well worth considering.

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