Moving to the cloud can help a business achieve some significant cost savings. In fact, the financial benefits of cloud computing are many and varied. But many wonder how using a new, highly-efficient technology could possibly be less expensive than using an established, tried-and-true alternative. After all, new tech is traditionally more expensive. But fortunately, that is not the case for cloud computing and other cloud services. This translates into potential for a strong ROI for businesses both large and small.
What Accounts for Cloud Cost Savings?
There are a few different factors that account for cloud cost savings, whether you’re opting for cloud data storage, cloud computing or cloud SaaS solutions such as a cloud-based ERP platform.
The COVID-19 pandemic is credited with fueling the cloud’s popularity, driving countless business leaders to seek easy-to-implement options that would help them achieve cost savings. With the cloud, everything is highly scalable which means this technology is suitable for companies of all sizes, from small businesses and startups, to medium-sized ventures and large enterprises.
Let’s take a look at the factors that bring about cloud cost savings, beginning with the eliminated need for hardware.
Cloud Cost Savings From the Elimination of Hardware and On-Premises Data Centers
When you migrate to cloud solutions, you are freed from the on-premise data center and all that pricey hardware. The cloud is accessible via a simple internet connection. There is no need to purchase and maintain servers on-site, which results in significant cost savings.
The cost of purchasing computing equipment and servers can be tremendous and the ongoing cost of maintenance and upgrades is not insignificant. Cloud solutions allow you to eliminate that financial burden.
What’s more, cloud services are highly scalable. You don’t need to buy a new piece of equipment to support growing computing needs, nor do you need to run equipment that far surpasses your current needs.
The issue of hardware and equipment can be a major limiting factor for budget-conscious startups and small businesses. This says nothing of the physical space required for this equipment. That makes this a very compelling cost savings advantage.
Reduced Personnel Costs and Cloud Cost Savings
Cloud computing resources are surprisingly easy to maintain. The cloud vendor typically takes on most of this burden and, as mentioned above, there is no on-premise hardware to maintain.
With an on-premise data center, a company is tasked with maintaining both the equipment and the software that runs that equipment – operating systems, firmware, middleware and so on. With cloud-based services, the vendor typically handles everything, meaning there is no need to hire data center specialists to oversee your technology (although many organizations will still need cloud and IT specialists to manage networks and other aspects of the technology infrastructure.)
Cloud solutions are often designed to be largely hands-off, which is good news when it comes to management and maintenance. For example, cloud data storage and cloud computing solutions are typically designed to automatically allocate additional resources as the need arises. Conversely, if there is a decreased need, the allocated resources are freed up for use by others. This auto-scalability is great both from a practical perspective and from a financial perspective since you are paying for only the resources that you utilize — nothing more and nothing less. That’s cloud cost savings in action!
Migrating to the Cloud to Improve Productivity and Save Money
Migrating to the cloud can seem a bit intimidating. In fact, any migration project can be intimidating, especially when you have multiple systems being combined into a single infrastructure. That said, there is much to be gained from shifting to a cloud interface.
Cloud platforms tend to be much faster and far more accessible than a traditional on-premise alternative. This improved accessibility and speed was one of the major driving factors behind the rise of the cloud during the COVID-19 pandemic. The pandemic prompted a distinct shift toward remote work environments. The cloud is accessible from anywhere with an internet connection, which means it really lends itself to a remote work arrangement. This improves efficiency and productivity, translating into cost savings that any company can appreciate.
We are also seeing an increase in the popularity and availability of cloud-based SaaS platforms, particularly cloud-based ERP systems. Cloud SaaS solutions are very cost-effective in terms of licensing, but also in terms of implementation and rollout. Cloud SaaS software can be deployed very rapidly — in a matter of hours in some cases — and most are designed with user-friendliness in mind. This spells more widespread adoption and improved productivity and cost savings that can be traced back to the cloud.
Small businesses and medium-sized enterprises can potentially see the biggest cloud cost savings when they opt to use SaaS solutions. The cloud has opened the door to technologies that were previously only available to large enterprises with a sizable IT budget. For instance, ERP platforms ran almost exclusively from large, costly data centers — technology and resources that extended far beyond the modest budget of a smaller organization. As a result, enterprise resource planning software was within the exclusive domain of big business. But the cloud has changed that equation, opening the door to companies of all sizes. Cloud-based ERP is now within the financial reach of startups, small business and mid-sized companies, leading to improved productivity and benefits to the organization’s bottom line.
Cloud Cost Savings from a Pay-as-You-Go Model
A vast majority of cloud platforms offer a pay-as-you-go model for their service offerings, although many also offer a discount to customers who opt to pre-pay for their service offerings for a longer period of time, such as a year.
This pay-as-you-go model is ideal for organizations with ever-changing needs because it allows for great adaptability and agility. Beyond this strategic and operational flexibility, pay-as-you-go pricing means you pay for only the resources that you utilize, meaning that there is no need to purchase a large service package on the off chance that you may require those resources. In cases of cloud-based SaaS platforms, the cost is often calculated by the number of users — a payment model that tends to be far less expensive than acquiring a traditional software license.
The cloud is great for companies that do not wish to put out a significant investment up-front. There is no need to establish or maintain an on-premise data center that is packed with heat-generating servers. Nor do you need to purchase costly software licenses for platforms that are inaccessible to staff who opt to outside of your office space.
When considering migrating to the cloud, you cannot forget about the security associated with cloud solutions. Today’s cloud services feature some of today’s most sophisticated security technology and encryption simply due to the highly-accessible nature of the cloud. This inherent vulnerability has prompted cloud service providers to pioneer new, innovative technologies to maintain security, making many cloud platforms significantly safer and more protected than many on-premise alternatives.
Harnessing the Power of the Cloud
At 7T, enterprise software is one of our specialties and we are major proponents of using cloud technology whenever the opportunity arises. Our development team works with company leaders who are seeking to solve problems and drive ROI through digital transformation. As an innovative Dallas software and mobile app development company, 7T offers collaborative, multi-phased software development services to clients in all business sectors.
Our offices are situated in Dallas, Houston and Austin, but our clientele spans the globe. If you’re ready to learn more about developing enterprise software, a mobile app or another solution for your organization, contact 7T today.