Virtualization Technology News and Information
Illuminating the Cloud for Increased ROI
Whenever I speak with CIOs and IT professionals about the benefits of cloud computing, I encounter a wide range of responses – from enthusiasm, to guarded optimism, to even outright skepticism.
While it’s clear that the cloud is playing an increasingly central role in IT, both the opportunities and challenges inherent therein, can be tricky to navigate. This has created a situation where efficient and economical use of the cloud is not all that common.
By clarifying some of the major issues swirling around cloud computing, I hope to equip the business community with knowledge and insight that will allow them to better maximize their IT investments.  
The True Cost of Home-Grown Hosting vs. Cloud Vendors’ Economies of Scale
One of the misconceptions I’ve found in the IT and financial community is that buying servers and hosting them internally is actually more affordable than outsourcing to the cloud.
On the surface this might seem accurate. If you divide the cost of the machine by the number of months in its expected service life, the cost typically is lower than that of most cloud vendor’s monthly fees.
However, a more comprehensive look at all the associated costs of running an internal data center show that this approach – relative to the cloud – is a very expensive proposition. Electricity, storage space, related IT infrastructure, administrative and of course hands-on IT management, all add up very quickly.
Cloud vendors, on the other hand, with their economies of scale can easily offer hosting that is far more affordable than what any single company can do on their own. In addition to the financial advantages, there is also the added benefit of agility that businesses require in today’s competitive market.

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Published Wednesday, May 30, 2012 8:04 AM by David Marshall
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