Can you really save costs with cloud computing?  Six out of ten enterprises seem to think so.

Enterprise Management Associates (EMA) conducted a survey* on 159 enterprises that had deployed or had planned cloud deployments. About 75 percent of the respondents said that they preferred the private cloud model. 52 percent had both on premises and off premises clouds. 61 percent of the respondents claimed that they had experienced lowered IT capital costs and 25 percent reported that they had experienced reduced capital expenditure and operational expenditure.

Other benefits that were specifically highlighted by the participants included:

  1. Freeing up of strategic resources (49%)
  2. Enabling disaster recovery and business continuity (46%)
  3. Increased flexibility and agility (46%)

Across the board, it was felt that cloud computing reduced CAPEX by 11-26% and OPEX by 21-30% and there were a number of hidden costs savings from cloud computing.

This report should excite enterprise system planners. The justification for cloud computing is very visible. Organizations that have implemented the cloud have testified to the benefits derived. It is an emergent reality that enterprise-cloud-computing results in cost savings. It is evident that cloud computing brings in visible monetary benefits and it results in the creation of some indirect, intangible assets that may or may not be translatable into monetary terms.

The immediacy of impact is felt by the in-house system development team.

  1. In house computing capacity is suddenly released and available for other mission-critical activities. This redeployment could result in higher productivity and optimization of use of resources available within the enterprise.
  2. IT teams are forced to perform an audit of levels of utilization of critical resources and make an estimate of the amount of cloud services required to provide reserve capacity.
  3. They no longer need to canvas for additional computing capacity for growing enterprise needs. CAPEX is replaced by OPEX, which is easy on the enterprise budget.

This results in an awareness of the amount of cost savings that the organization can enjoy by offloading peak demand to the cloud.

Smart enterprises understand that cost savings in the cloud is defined in more than monetary terms. The tangible and intangible benefits have to be taken into consideration while making a business case for the cloud. The number of intangible value-add cannot be reduced to monetary terms such as:

  1. Agility, mobility and scalability
  2. Storage savings due to data compression, deduplication and other cloud computing technologies
  3. High availability and reduced downtime, and
  4. Increased operational efficiencies