There are all sorts of benefits in store when you switch to cloud computing. These include increased agility, less time taken to get to market, and less need for in-house expertise. However, what we are covering here are the financial benefits of cloud computing. So, let's get on and do that. Here's a handy pictorial.

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We'll take a look at what it means in more detail below. But first, let's just cover what cloud computing is.

What is Cloud Computing?

Years ago, households often had to manage their own water supply. This could mean having a well in the garden. If so, your life would depend on maintaining that well and dealing with all the problems that might arise with it.

You would have to worry about the growth in demand due to the arrival of new family members and reductions in supply due to the weather. You would have to keep your well clean and free from pollutants. You might have to get assistance if there's a blockage.

In short, having a well would be a big headache. So, when piped water arrived, it was a huge benefit. Just the same with cloud computing. Instead of having to have all your equipment on site and up to you to maintain, all such concerns are removed to a remote, yet accessible, location.

This is achieved by the creation of a network of servers, all based on the internet, which are connected to your business. This in turn means that an array of computing services, including databases, networking, analytics, and storage, are all made available to your company in an efficient and effective manner.

Businesses gain access to these benefits by paying a subscription fee, and different levels of service for different fees are usually available.

Cloud computing is enormously widespread now and is responsible for the growth of a wide range of industries, from social networking to business VoIP line providers, and includes well-known business entities, from Gmail to Netflix.

1.   Hardware Savings

 

Most traditional system set-ups have a large hardware component by necessity. This will have at its core a relatively large server, which can often sit in a room dedicated to its accommodation.

All this hardware costs money, both up-front in terms of purchase, and over the course of time in terms of maintenance. Power is needed, as well as cooling, and this is increasingly expensive. Installation costs a substantial amount too, with building alterations often required. And that space that the server requires could be busy doing something more productive for your business, so that's more cost right there.

When you make the decision to go with cloud computing, all this physical gear disappears, taking with it all that financial outlay. On top of this, any updates that your business will inevitably require are taken care of by your cloud provider, so that's more money and hassle saved.

2.   Software Savings

Just as with hardware, software needs updating. In fact, much more so. These updates can be hugely costly for an in-house system, but this area can be one of the biggest financial benefits of cloud computing.

Alongside this saving, your business will enjoy further benefits, such as instant and direct employee access to all necessary software, which means savings in terms of fewer hard copies being required.

Software is becoming a bigger consideration, coming into an ever greater number of product areas as the internet of things grows apace. IoT software development is consequently going to be a larger and more expensive area to have to stay on top of. If you can rely on another body to take care of this for you, so much the better.

Finally, and hugely important, your support needs are attended to 24/7/365 via email, instant message, even Microsoft voice, so downtime is minimized. No expensive software technicians must be kept on the payroll, which is a significant financial saving.

It is because of the savings that it makes possible, as well as other advantages, that SaaS is exhibiting such remarkable growth.

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3.   Pay-As-You-Go

Both hardware and software services can be delivered on a pay-as-you-go basis. This is of huge benefit to businesses, easing the front-loaded burden of buying equipment and software wholesale.

The additional benefit here is that you will often only pay for the amount that is being used, i.e. you will have coverage that is fitted to your business size. Moreover, should there be aspects of the service that you don't use, you can usually opt to shed that part of the package with little wait time.

For instance, small business phone service providers will offer packages that differ in content from larger business service providers and will give the client a range of options from the most basic ‘talk, message and meet' package upwards.

4.   Energy Savings

Electricity is expensive, and prices are going up. Why pay to power a room full of power-hungry equipment when you can offload all this to the cloud? Using a cloud-based system makes sense from an energy-buying perspective and from an ecological perspective.

The multiple-client provision model delivers lower energy costs per unit, courtesy of the economy of scale. Your business will benefit from this saving.

Turning to the environment, cloud-based services can be advantageous. In-house servers are under-utilized and inefficient. Cloud-based services tend to be adept at forecasting demand so are optimized for peaks. This results in a more efficient use of power and a consequently greener profile.

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Imagine if free stock videos were all stored on a multitude of on-premises servers up and down the country. Now visualize all the energy that would have to go into powering and cooling those servers. Now think of one cloud-based server delivering those videos to a vast number of customers. That's green thinking.

5.   Reduced Staffing Costs

As mentioned previously, once you start using cloud-based systems, your need to retain IT professionals on your staff is immediately axed. Software and hardware experts are expensive to keep on the payroll.

What's more, they have to undergo training to stay on top of their game. This might involve further expense in bringing in other experts. The whole thing can be a massive financial drain, as IT specialists are not cheap. This is an overview of the situation in the UK.

For a number of businesses, staffing is a huge enough expense as it is.

A call center, for instance, depends on a high level of staffing for its service provision. A hosted contact center service will enjoy reduced costs by virtue of doing away with the need for a technical department full to the brim with expensive specialists in cabling and who knows what else. No cabling: no expense.

6.   Better Data Security

 

Using cloud computing and cloud integrations means higher levels of data safety. This is because cloud-based service providers are professionals in the area of security. They will utilize the most comprehensive and up-to-date security solutions.

How does better security number among the financial benefits of cloud computing? By protecting your business from the ever-growing costs of having to stay on top of data incursion threats.

Data breaches are costing US businesses more than ever before. In 2022, the average cost that accompanied a data breach rose to $4.35 million. Of course, the costs to your business reputation are immeasurable. All that careful nurturing of client confidence was blown in a careless instant.

As the range of customer data that your business accumulates becomes ever larger, and the need for compliance grows ever more serious, you have to attend to an ever greater range of junctures at which data is shared, such as customer journey touchpoints. By allowing cloud computing to assist with this, your life will be eased in no small way.

7.   Increased Productivity

By enhancing your company's collaborative potential, your costs relative to productivity will diminish.

 

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A cloud-based system will deliver the same service to all staff, no matter where they're located. This means your business can benefit from teams working across the globe, all using the same systems and the same data.

This applies to a range of business models. For instance, when an ecommerce operation is considering how to set up an affiliate program, it's worth factoring in how a cloud-based system will allow affiliates greater collaborative potential with the business and with each other. This is because cloud-based services are more geared up for use by remotely located elements.

Also, when it comes to installing new software, with cloud app modernization this can happen, across the whole company, in a matter of hours. An in-house system can take days. And any issues that arise are down to you and your IT professionals to sort out. With a cloud-based system, the issues are for the service provider to tackle.

8.   Better Scaling

As your business grows, you need to know that the systems it uses will grow in capability accordingly. If you've purchased an in-house system, you may well find that you outgrow its capacity relatively quickly. Expensive and wasteful jettisoning and replacement then ensue.

With a cloud-based service, your growing needs are met by a truly elastic and responsive business assistance provider. This will result in your business paying for a system that is pitched at the right level, not struggling to keep up with your company's growth, and not too big for your purposes.

You will also not have to rely on patchy and unreliable growth forecasts. Just upscale your service when you need to.

You can scale up temporarily too, to cater to short-lived peak levels of demand.

9.   Disaster Recovery

 

It's not pleasant to think about, but, sooner or later, your business will no doubt experience some kind of data-related disaster. When this happens, you'll have two sizeable costs to face:

1. The cost in terms of IT professional assistance. If the data takes a good deal of restoration, your IT staff will have to dedicate their resources to this task, at the expense of the other areas that are their day-to-day duties, such as maintenance, staff training, etc.
   

1. The cost in terms of downtime. Think of all that profit evaporating while your business lies stricken. And think of your competitors, swooping down to steal your customers with all the glee of hungry raptors.
   

Using cloud-based systems, your business will have access to better data recovery services than in a conventional on-premises system. The other advantage here is that a cloud-based system will be able to route customer traffic more effectively so as to avoid a problem in one particular sector of your business.

10.   Testing Facilitated

Using cloud-based services makes testing new procedures a good deal easier, more straightforward, and cheaper. Testing such as data analytics is easier to perform in a cloud-based system.

For instance, cloud computing gives them the ability to test out a new platform before actually implementing.This helps establish reliability, in a safe format that protects a company from any unintended consequences.

Case Study: Riso

Printer manufacturer Riso was encountering difficulties born of widespread working locations, outdated systems, and using too many different IT suppliers which contributed to considerable financial trouble.

Riso turned to Apps Associates, a cloud migration specialist, which started by assessing the printer company's needs and how cloud-based might better service them. It looked into the existing IT infrastructure and costs associated. Next, it developed a proof of concept and validation for moving the business suite into the cloud, together with backup services.

Once the cost benefits were assessed, these applications were migrated to Amazon Web Services, a process which took, in all, about six months to complete. Storage was upgraded from on-premise tape backup to Amazon S3 cloud disaster recovery service, and a VPN was created to cover AWS, warehouses and corporate headquarters.

What benefits did all this deliver?

1. IT operational costs were slashed by 55%.
2. IT backup infrastructure costs were reduced by 35%.
3. IT supplier numbers were cut from 6 to 3, streamlining business processes considerably.
4. Greater responsivity to demand resulted in significant cost savings.
5. Staff was freed up to concentrate on productive tasks and achieving business goals.
6. Easier testing procedures for new products.

Conclusion

Cloud computing can deliver a comprehensive range of cost benefits to your business, so switching is something to be recommended for most.

One caveat that's worth mentioning: sometimes, it can look like the cost has gone up. Don't panic though. This is invariably due to increased business. As mentioned, with most cloud services, you pay for what you use. If you're using more services, this means your business is growing. This is a good thing. Relax. Cloud computing has got this.

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ABOUT THE AUTHOR

Richard Conn - Senior Director, Demand Generation, 8x8

 

Richard Conn is the Senior Director for Demand Generation at 8x8, a leading communication platform with integrated contact center, voice, video, and chat functionality. Richard is an analytical & results-driven digital marketing leader with a track record of achieving major ROI improvements in fast-paced, competitive B2B environments. Check out his LinkedIn.