Here’s a fact: in 2020, companies are moving to the cloud en masse. But why? On the surface, cloud computing doesn’t directly lead to cost reductions in a typical small to medium business. In fact, cloud migration can potentially increase IT costs. So why is cloud adoption on such a meteoric rise?
The answer is long-term cost savings. Cloud migration saves money by giving your business the ability to scale up efficiently and fast, at a fraction of the costs of traditional solutions and at the same time, supports your workforce with a more accessible and interconnected work environment.
In this article, we’ll put a typical cloud migration under the microscope to better understand some of the biggest cost savings that come from cloud migration and early cloud adoption.
1. Hardware Costs (CapEx vs. OpEx)
On-premises datacentres and the Cloud have different types of expenses. The former requires a large initial investment (to buy the hardware) known as a Capital Expenses or CapEx. The latter requires a small initial investment but continued monthly costs known as Operating Expenses or OpEx.
For instance, a single unmanaged computer can cost $5,000 annually alone and this CapEx will continue to rise quickly if you are in the process of digitizing your workplace. Apart from the very high initial purchase cost of hardware (an obvious disadvantage), on-premises data solutions also suffer from depreciation and maintenance costs. Furthermore, the hardware itself can become obsolete within a year if your requirements change.
This is not the case with the cloud. You don’t pay for maintenance of the hardware and you don’t pay for depreciation. You only pay for what you use. Speaking of which…
2. Pay As You Go (Pay-per-use schemes)
There is another problem with on-premises hardware – you may not be 100% capacity all of the time, but that won’t change the retail price you’ll pay on the hardware.
Cloud computing costs, however, are a different story. Google Cloud Platform, for instance, offers Pay As You Go pricing which means you’re only paying for the resources you’re using. Getting barely any traffic on Wednesdays but reaching capacity on weekends? No problems. The GCP automatically scales up to keep up with that demand – this is known as autoscaling and it’s not only a cost benefit but also beneficial from a logistics angle.
3. Reduced Personnel Requirement
Apart from the capital investment of hardware for an on-premises IT center, businesses also need to have a team of IT specialists on the payroll that ensure everything works the way it’s supposed to and avoid downtime. And as you can imagine, the cloud costs less than a specialized IT team.
Through cloud migration, you can cut down labor and maintenance costs that come from having your own on-premises data center and even eliminate those costs completely. Alternatively, cloud computing allows your team to focus on more important tasks (like updating your software).
4. Improved Security
There has been a lot of misconception about the security of the cloud but the truth is that the security will actually improve for the average SMB, migrating to the cloud from on-premises IT. And while this is more of a “potential cost” rather than a present cost – it should not be avoided.
The average data breach can cost a company over $3.92 million in 2019 and while the penalty may be less for you, a data breach is something you should always try to avoid at all costs as you could very likely lose reputation, employees, and trade secrets.
5. Agility and Scalability
A cloud ecosystem is built on the cloud-native philosophy – build agile applications that are reliable and easily scalable. However, the philosophy isn’t limited to apps, it extends to your company as a whole. As your company grows, your requirements will too. Fortunately, your cloud ecosystem is built to grow with you – automatically. Everything is built with growth in mind and to make expansion as effortless as possible.
Google’s global servers, for instance, means that your customers will always find a speedy and smooth user experience, no matter where they are located. Being on the cloud also means that as you inevitably grow and expand, you’ll have access to thousands of professional tools and a strong but agile foundation.
Conclusion: Cloud Gives You The Competitive Edge for Less
If you’re still unsure about the feasibility of cloud migration, consider this:
After all is said and done, nothing matters if you’re pushed out of the market. Cloud migration allows you to not only compete in the digital age but also have an edge over your competition.
There’s a reason floppy disks aren’t around anymore – they weren’t competitive enough and were made obsolete by better performing technologies. As harsh as it may sound, legacy businesses are at a similar crossroads. A vast, vast majority of the world’s organizations are migrating to the cloud due to not just immediate and direct benefits but also long-term benefits that prepare your company for the future – while also saving lots of money.
If you’re interested in learning more about cloud migration and the associated cloud costs, schedule a free consultation with one of our certified cloud experts at D3V.