The ultimate goal of any enterprise is to boost the bottom line and cutting costs and improving ROI are two of the main ways to achieve this. With the adoption of enabling technologies now a necessity in the age of digital transformation, many companies have migrated to the cloud not simply because it puts these technologies at their fingertips, but because it also provides financial advantages. Here, we examine seven ways it achieves these.
Cutting Costs
1. Removing capital expenditure
In-house datacentres have always been expensive operations to set up and run, but as businesses become reliant on technology and constantly need to buy more of it, that expense has, for many, become a budgetary black hole. The most significant issue here is with the capital expenditure needed to purchase the high-performance hardware the digital company needs – and to keep upgrading when it becomes obsolete.
Migrating to the cloud permanently removes the need for capital expenditure on new hardware as enterprises simply run their applications on the infrastructure of their service provider. With Infrastructure as a Service (IaaS) now so widely available, CEOs, CFOs and CIOs increasingly see in-house datacentres as white elephants that hinder their progress.
2. A string of other savings
With operations running in the cloud, enterprises no longer need anywhere to house a datacentre, nor pay for the ongoing running costs: security, energy and insurance, for example. Nor do they need IT personnel to carry out maintenance – freeing them up to work on more business-related projects.
Once an enterprise moves to the cloud, there are other savings to be taken advantage of; for example, the growing number of open-source applications that make it less expensive to run operations in the cloud. Even when proprietary software is needed, the vendor can often provide it cheaper, using their own licencing agreements, compared to the cost of buying a licence.
Security is not only less expensive in the cloud; it’s also more advanced. Most enterprises would struggle to equal the investment in security technology and expertise of their provider. What’s more, many of the advanced tools providers deploy, next-gen firewalls, etc., are included in the service.
3. Cost-efficiencies
The ability of enterprises to scale resources up or down on-demand and only pay for what they use offers even greater opportunities to keep budgets to a minimum. Because of the cloud, the need to pay for redundant servers just in case demand increases has become a thing of the past.
One excellent example of how this is used is with the Gohenry company – a business that provides children with payment cards that are topped up and managed by their parents. The company noticed that there was a huge spike in demand every morning as parents topped up their children’s cards before they set off for school. As a result, it scales up resources for these hours every day then scales back again when the busy period comes to an end. This enables Gohenry to meet the demand of its customers in the most cost-effective way.
When it comes to figures, market research organisation, Vanson Bourne, reported that cloud adopters saw a 16% decrease in operating costs, a 15% fall in IT spending and a 16% reduction in maintenance costs.
Return on Investment
4. Increasing productivity
The cloud empowers enterprises to be more productive, putting technologies like AI, ML, automation, data analytics and IoT at their disposal while enabling them to develop and deploy applications quicker and less expensively. As a result, they are better able to take advantage of opportunities in the market and adapt to change. According to recent research, cloud adopters, on average, increase processing efficiency by 18% and time to market by 20%.
The cloud’s ‘anytime – anywhere’ nature makes collaboration quicker and easier, not just enabling remote working but allowing global teams to work together and share documents and data in real-time, using the growing range of sophisticated, cloud-based platforms now available.
5. The efficiency of automation
According to Vanson Bourne, the automation used in the cloud can reduce IT management time by as much as 38% while delivering increased productivity across the range of business operations. This helps keep prices competitive and margins healthy.
6. The benefits of Big Data
Data underpins everything the modern company does but making use of it requires a great deal of storage and networking capacity. New cloud-native technologies now allow enterprises to run their data processing workloads faster and with fewer resources. This gives them quicker and less expensive access to the insights that help them overcome technical and logistical problems, improve efficiencies and find market opportunities.
7. Security and ROI
ROI and security aren’t usually part of the same conversation, however, some of the security features of the cloud are directly linked to a company’s financial interests. The cloud, for example, guarantees high availability, offers swift disaster recovery and reduces risk – all of which have financial implications, especially in an age when downtime, cyberattack and data loss can have catastrophic outcomes.
Conclusion
While cloud adoption brings measurable savings, it’s more challenging to calculate its effect on ROI. That said, the increased productivity, agility and efficiency it provides can help enterprises remove weaknesses and capitalise opportunities. Indeed, according to Vanson Bourne’s research, those companies that do migrate experience growth of almost 20%.
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