The Cloud is hailed as the solution to all agility, availability and scalability problems of the small and medium industry. The added bonus is the lower costs involved in Cloud computing! But, is the Cloud really economical to the small and medium enterprise. Let us examine the facts and draw our own conclusions.
Experts find value in the cloud because infrastructure, software and platforms are constructed and maintained by third parties and customers only “utilize” the resources and pay for the “utilization”. Therein lies the economy. SMBs do not have to invest in expensive infrastructure or software. They just use the resources that are delivered ready-to-use by Cloud service providers. The model recalls the era when the telephone and the electricity companies began offering “utility services” and how these services became cheaper and more ubiquitous.
But, the moment you take up the challenge, the mathematics becomes squishy. Small and medium enterprises will have to figure out the economics of “pay per use bandwidth” as against a fixed bandwidth deal. The cost of maintenance and management of the outsourced components and the in house components must also be taken into account. The number of IT heads that vanish with the Cloud may not make a real difference to the costs.
Cloud vendors recommend trial runs for better understanding of the costs of running applications in the Cloud. They urge customers to calculate costs by calculating the actual spend. But, 14 or 15-day trials do not scope in market fluctuations that are a real world problem. For instance, a number of companies in the IaaS and Cloud backup space have made two dozen pricing announcements in a span of two years. So, SMB calculations can be way off the mark and no trial can provide the customer with “actual spend” data for creating necessary expense constructs. The experiment can at best be indicative.
Yet, customers are transitioning to the Cloud in large numbers. Gartner points out that there is almost an 18% annual increase in the number of subscribers! So, what drives them on? From the above discussion, it is evident that money cannot be the sole deciding factor in Cloud transition decisions. It is the soft savings that seems to make the difference. There are a number of intangibles that are attracting customers.
Ease of use and functionality have a large role to play in the decision making process. All the pains of developing and maintaining the application is left to third parties while customers can enjoy the outcome of the efforts. Furthermore, there is no measure for “cost of agility” or “high availability” or increased efficiency, mobility and market reach. So, while a cost analysis may show an increasing spend on the Cloud in the initial phases, executives are beginning to realize that there is more to the Cloud than raw savings on the infrastructure.
Securstore recommends that you test the waters by taking our trial. But, we urge you to an understanding that there is more to the Cloud than dollar savings. Count the intangibles and set a value to them, before you decide for or against the Cloud.