A Commercial & Financial Business Case for Cloud Computing.

Posted on May 10, 2017 by Complex IT

Cloud Computing presents many opportunities.

Many businesses are migrating to the cloud because of the many benefits it brings to the table, one of which is the positive financial aspects of implementing a cloud service model.

Cloud computing will benefit businesses of all sizes by helping them compete in the marketplace at a much lower operational cost. Cloud computing has also proved to be extremely beneficial to smaller companies by offering advanced productivity tools and capabilities that only larger organisations with extensive IT budgets can afford.

In addition.

With most cloud computing models, businesses of all sizes can tap into powerful software and services by simply using a web browser and access to the Internet. Additionally, companies are provided with the convenience to pay only for the resources they use with access to a broad range of IT resources from advanced CRM systems to secure data backup and storage, all at an affordable cost.

Your business case for Cloud Computing.

If you are an IT professional looking for helpful information to support your business case for cloud migration, this article should help you get started with a few credible resources to begin building your presentation.

Business Case For Cloud Computing

The Cloud is expected to completely change business by 2020.

Major research firms such as Gartner and the National Institute for Standards in Technology (NIST) predict that organisations who fail to migrate to the cloud, will be outnumbered by the high percentage of global companies that have moved to cloud computing.

An interesting cloud survey says…

A survey conducted by RightScale, a leading universal cloud services provider, cloud adoption is on the rise as companies and cloud providers realise the benefits of cloud migration. In January of 2016, RightScale conducted its fifth annual State of the Cloud Survey of the latest cloud computing trends, with a focus on Infrastructure-as-a-Service (IaaS).

The State of the Cloud Survey is the largest survey covering the use of cloud infrastructure.  The report focuses on statistics of companies adopting cloud infrastructure and the end users. The survey provides an overall perspective on the preferred types of cloud infrastructure by polling 1,060 IT professionals regarding their adoption of cloud infrastructure and related technologies.

According to the State of the Cloud Survey, “42 percent of the respondents represented enterprises with more than 1,000 employees. The margin of error is 3.07 percent.”

Also.

The study also found, “More enterprise workloads moved to both public and private cloud over the last year, with private cloud and hybrid solutions growing faster. The number of enterprises running more than 1,000 virtual machines (VMs) in public cloud increased from 13 percent to 17 percent, while those running more than 1,000 VMs in private cloud grew from 22 percent to 31 percent. The private cloud growth in workloads also may include long-standing virtualised environments that have been enhanced and relabeled as a private cloud.”

The report summary following the survey also demonstrated how the cloud can save your organisation time and money, and completely change the way your company conducts business.

Business case - Cloud computing set to double

Cloud Computing is expected to double in the next 6 years

A recent study.

UK consulting firm Emergent Research and Intuit, a financial software company, completed a study that showed, “the percentage of small businesses using cloud computing is expected to more than double during the next six years, from 37 percent to nearly 80 percent.”

“Although the use of the cloud infrastructure and applications is typically associated with the ability to reduce costs while increasing efficiency, widespread adoption of cloud computing is expected to have a transformative effect not only on small businesses, but also on large enterprises and government organisations.”

Look.

Intuit also released a study in August 2016 that found “70% small business owners realise the value of connecting data from different apps and existing technology solutions.   Most small businesses around the world are using the cloud and relying on apps to run their business. Those are among the findings of a multi-country study released by Intuit Inc.”

The study, which focused on small businesses in the U.S., Canada, the U.K., and Australia also revealed that 64 percent of small businesses run in the cloud, 68 percent use apps, and 66 percent use a smartphone. In addition, small businesses owners are seeing – and experiencing – the long-term effect of mobile and Web-based apps on their bottom line, allowing them to focus on growing their business.”

According to Emergent Research and Intuit.

“The efficiency gains continue, but we’re also starting to see the emergence of new capabilities.”

Cloud Business Model image

What cloud service models are we using and why?

What are some of the new capabilities and what types of organisations are using them? According to Emergent, some examples include:

Use of Cloud-Based service providers.

Many accounting and payroll companies are leveraging the cloud by plugging into cloud-based service providers capable of handling forms and filling, taxes, and other data. This saves businesses time and money when it comes to completing required documentation for the government. It also helps to avoid errors that result in hefty fines and allows companies to focus more on important business initiatives.

Leveling the playing field.

There are smaller companies that are leveraging cloud computing as a tool for competing with large enterprises.  For example, there are small investment banking companies with just a handful of staff successfully competing with major players such as JPMorgan and others through the use of advanced resources cloud services provide without the hefty operational cost.

Managing multiple income streams.

Thanks to advanced cloud applications that provide automation for many different tasks, employees and business owners that must manage multiple income streams can accomplish it successfully using cloud computing. For example, small companies with only a few staff members who may hold more than one job can easily use shared workspaces to maintain collaboration and manage multiple streams of income.

Branch office management.

Companies that have employees spread across multiple locations can use cloud computing tools that provide easy collaboration and communication in real-time.  These are tools that include meeting spaces in the cloud, shared workspaces, document sharing, and much more. This saves businesses time and money associated with traveling and communication.

These are only a few examples of cloud service models. Researchers such as Gartner predict that more than eighty percent of companies will adopt cloud computing over the next 6 years.  If not, the companies risk falling by the wayside as companies with cloud computing initiatives in place continue to forge ahead.

Moving your Infrastructure to the cloud to reduce costs.

Moving to the cloud requires a great deal of planning and consideration to identify the types of infrastructure that can successfully migrate to the cloud. However, a few common infrastructures can include the following:

  • Applications that have assets which are under-utilised.
  • Applications that are flexible in terms of architecture.
  • Applications with urgent business needs for scalability and are currently low on capacity.
  • Applications that require scaling on a global basis such as customer facing advertising and marketing apps.
  • Applications currently using on-premises tape technology for data backup.
  • Specific applications that are reserved solely for partners.

Once you have a list of infrastructures and applications, you can prioritise the list to maximise cloud capabilities including computing, networking, storage, and databases. Then you must build awareness of the advantages and financial benefits with key stakeholders in your company through impact on building your case and visibility.

Cut costs with cloud computing - business case

The financial benefits of moving to the cloud.

According to Seagate,

“82% of companies reportedly saved money by moving to the cloud.” Seagate also predicted in an easy-to-understand infographic that the global market for cloud equipment will reach $79.1 billion by 2018, with equipment including servers, storage, networking hardware and high-speed links.

So why the market increase?

Mainly, it’s the financial benefits and increased productivity that is motivating more companies figure out how to effectively migrate to the cloud. If your organisation is trying to determine the best route to migration to take advantage of the financial benefits, there is a helpful and in-depth study by Claus Pahl of Dublin City University provides you with tremendous insight on “A Comparison of On-premise to Cloud Migration Approaches.”

“A Comparison of On-premise to Cloud Migration Approaches” discusses three different case studies by cloud providers on the three common layers of cloud computing which include Software-as-a-Service (SaaS) Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS). The author of the study effectively answers the common unanswered questions companies have about how to move and migrate to the cloud in the most appropriate and cost effective way.

That said, once you choose your model, some of the financial benefits include:

Reduced IT costs.

By using cloud-based services, your organisation can significantly reduce costs associated with maintaining and upgrading servers in addition to saving money on your utility bill with reduced cooling costs and power consumption. Depending upon your cloud model, your organisation could potentially have zero upfront IT capital costs and lower TCO.

In terms of infrastructure, many companies are saving money by subscribing to cloud services for a low monthly fee.  Instead of having unused hardware lying around in anticipation of business expansion, you only pay for the resources you use with the option to scale up at a moment’s notice. If business slows down at certain times of the year, you can also subtract resources which saves space and money.

Reduced upgrade and software licensing costs.

In the past, companies were required to invest a significant amount of their IT costs to upgrade to the latest version of applications.  Additionally, the license fees to acquire the rights to use the software could occupy a huge chunk of your IT budget, depending upon the size of your organisation.

When your organisation adopts cloud computing, you automatically have access to the latest upgrades and security patches. Plus, there is no need to purchase new licenses when you upgrade to the latest version of the software. A monthly subscription fee in addition to a solid Service Level Agreement that guarantees access to upgrades is basically all it takes.

Decreased Data Backup and Disaster Recovery costs.

Some businesses lack the time and resources to devise a plan for data backup and disaster recovery.  This could prove to be a catastrophe in the event of data loss or a natural disaster.

Or, if you currently back up your data on the premises, you must have the IT technologies such as redundancy in place to quickly recover data.  This means increased IT costs.

If you opt to back up your data in the cloud, you can easily retrieve lost data and be up and running quickly. Cloud service providers frequently back up data and store it in multiple safe data center locations.  In most cases, you can be up and running in minutes following a disaster while significantly reducing the costs of backing up data on the premises.

Lower IT security costs.

As far back as 2013, in a global survey conducted by Thales and Ponemon Institute, researchers on information and privacy management examined company perception towards encryption and data protection in the cloud. The survey found that companies of all sizes are adopting cloud services for handling large amounts of sensitive information.

According to Thales and Ponemon, “The verdict: the majority of small businesses transfer sensitive or confidential data to the cloud and that same majority believe the cloud provider has primary responsibility for protecting that data.” The cloud provider also assumes responsibility for the proper security technologies required for securing data and meeting specific industry compliance standards.

In most cases, this is where a lot of companies fall short because data security can mean excessive IT costs, especially when it comes to remaining in compliance.  By using cloud services, this relieves a lot of headaches for businesses with limited IT budgets while reducing IT costs.

Lower travel and productivity costs.

Cloud computing is compatible with any device that has access to a web browser and Internet connection.  This promotes improved collaboration while reducing travel costs.  Additionally, your employees can work from anywhere and at any time which fosters productivity.

Using collaborative cloud technologies, company teams can collaborate on a project, regardless of where they are located.  This reduces travel costs associated with being required to travel to a specific location to work on a project. Instead, teams collaborate in real-time without the confusion of email attachments, out of date task lists, and calendar scheduling, to name a few benefits.

Additionally, employees can leverage the power of IM, web conferencing, and audio to improve communication.  The result is a quick and accurate response to business responsibilities at a reduced cost.

Lower costs related to business growth.

One of the biggest challenges for most businesses is predicting and determining what resources you will need both now and in the future. This often leads to money spent on unused resources.  Using the cloud, you can scale up or down on resources and easily add new business tools as the need arises.  This is usually accomplished on a moment’s notice and allows you to easily react to needs instead of predicting what you will use.

High Availability and greater reliability at a lower cost.

Cloud-based applications and services have proved to be more reliable than those implemented on the premises. This is especially true if your infrastructure is old and in need of an upgrade.

Instead, cloud services employ an entire staff of IT professionals ready to solve problems faster than staff in a company with limited IT resources.  If you do employ IT staff on the premises, this leaves them time to concentrate on mission critical business initiatives. Additionally, availability and reliability is backed by a Service Level Agreement (SLA) that in most cases, guarantees an uptime of 99.9 percent with technical support around the clock 24/7, 365 days per year.

Lower expenses related to physical office space.

Since the cloud empowers your employees to access their work from anywhere, there is no need to store large office equipment in multiple rooms.  This cuts back on the costs of office equipment as well as physical office space.

Lower costs associated with devices and device management.

By migrating to the cloud, you are centralising access to applications and databases.  Most companies are using this benefit and combining it with a Bring Your Own Device (BYOD) policy which reduces the costs of having to implement a server and then install massive desktops to set up your network. This significantly reduces costs of purchasing desktops or other devices and allows your staff to work on the device of their choice without having to worry about compatibility.

Time means increased profits.

When your staff can access their work in the cloud from anywhere and at any time, they can work from anywhere at any time without having to wait to come to the office.  The result is a reduction in downtime which makes your employees more productive.  It also helps your company provide improved services that result in increased profits.

Cloudonomics 101

Build Your case for Cloud Computing with Cloudonomics.

Finally, a powerful way to build your business case for cloud computing is by introducing key stakeholders in your company to the Laws of Cloudonomics. These laws provide your organisation to define your cloud requirements and implement a strategic advantage that will last for the long term.

According to Bloomberg.

The 10 Laws of Cloudonomics include:

Law No. 1 – Utility services cost less even though they cost more.

Law No. 2 – On-demand trumps forecasting.

Law No. 3 – The peak of the sum is never greater than the sum of the peaks.

Law No. 4 – Aggregate demand is smoother than individual.

Law No. 5 – Average unit costs are reduced by distributing fixed costs over more units of output.

Law No. 6 – Superiority in numbers is the most important factor in the result of a combat (Clausewitz-military strategist).

Law No. 7 – Space-time is a continuum (Einstein/Minkowski).

Law No. 8 – Dispersion is the inverse square of latency.

Law No. 9 – Don’t put all your eggs in one basket.

Law No. 10 – An object at rest tends to stay at rest (Newton).

We invite you to click on the 10 Laws of Cloudonomics link to further investigate the meaning of these laws and to help build your business case on how your company can save money with cloud computing.

About Complex IT.

An award winning London-based IT Consultancy.

Complex IT specialises in the management of complex IT projects and providing ongoing strategic IT consultancy to large organisations across the UK. One of our specialist areas is Cloud Adoption services, helping businesses to make the transition from their existing network Infrastructure to one or more cloud based technologies. Visit our cloud adoption page to find out more, or click below to discuss your requirements with an IT Consultant today.

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The Author: Katie Parson

The Author: Katie Parson

Content Architect at Our IT Department Ltd.
A Woman of few words, except when writing. Katie likes to write about anything technology related and enjoys gaming in her spare time. Stay up to date with Katies latest work by following her on Twitter.
The Author: Katie Parson

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