Saving Money in the Cloud

The benefits of cloud computing are well established - faster time-to-market, greater flexibility as it relates to IT strategies and a more efficient response to competitive conditions in general.

But who are we kidding?! What has really driven adoption is the opportunity as it relates to cost savings - and for that you can thank the notion of "economies of scale" (a proportionate saving in costs gained by an increased level of production).

Of the many enterprises I have had the opportunity to discuss the cloud computing trend with (large corporations and small businesses alike), the single most frequently stated benefit is reduced operating costs. Companies that use cloud computing are able to focus on more important business issues (or problems) rather than investing in hardware, additional personnel and managing the inevitable operating cost of it all. Let's explore how economies of scale leads to enterprises saving money in the cloud.

HARDWARE: Using cloud computing results in high utilization of hardware. Enterprises share server infrastructure with others' computing needs, allowing the cloud-computing provider to optimize their own hardware needs and pass the savings on to their users.

POWER: Cloud computing also reduces the power costs incurred by enterprises. Those running their own data center likely don't fully utilize their servers (due to the natural peaks and valleys of computing usage) and idle servers waste energy.

PEOPLE: Budgets for staffing are often the single biggest line item within enterprises. IT people are expensive (salaries, benefits, recruiting) and those costs usually outweigh everything else. Moving to the cloud means a portion of a monthly cloud expenditure goes to the staff of the provider - and it's likely less than if your technology presence was handled internally.

The benefits are obvious and the cost savings significant - and the cloud is most certainly no longer a secret. Businesses are finally coming around when it comes to using public and private cloud environments for hosting their applications and there is plenty of supporting evidence.

Statistics released in late 2013 from Bitnami, a service that enables users to launch applications and entire development stacks in the cloud, revealed that 41 percent of respondents indicated that their organizations deployed more apps in the cloud during the past 12 months than in the previous year. Fifty-six percent also planned to deploy more cloud apps in the next 12 months. The data is very much in line with a recent SpiceWorks study, Cloudification of the Network (see sidebar).


Spiceworks released results of a survey in Aug. 2013 that analyzed the familiarity and use of cloud networking technologies by SMBs. The study, "Cloudification of the Network," revealed that despite security, control and uptime concerns, more than 40 percent of IT respondents were currently using, or planned to use, cloud networking services in the next 12 months.

So to which cloud-computing providers are companies turning? Amazon Web Services (AWS) remains the most popular destination for cloud deployments according to the Bitnami report, with nearly 39 percent of respondents expecting to deploy applications on AWS in the next year. After AWS, the next most common cloud deployments were private clouds (27 percent), followed by Google Compute Engine (16 percent), Microsoft Azure (11 percent), VMware Cloud (11 percent) and Rackspace (8 percent).

Small businesses (less than 50 employees) have generally adopted cloud applications at a slightly higher rate than large organizations (more than 1,000 employees) during the past 12 months: 48 to 38 percent. Private cloud adoption was highest among larger organizations (greater than 1,000 employees) with 39 percent of respondents expecting to deploy applications in private clouds over the next 12 months compared with just 25 percent for small companies.

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