1. FULLY UTILIZED HARDWARE
Cloud computing brings natural economies of scale. The practicalities of cloud computing mean high utilization and smoothing of the inevitable peaks and troughs in workloads. Your workloads will share server infrastructure with other organizations’ computing needs. This allows the cloud-computing provider to optimize the hardware needs of its data centers, which means lower costs for you.
2. LOWER POWER COSTS
Cloud computing uses less electricity. That’s an inevitable result of the economies of scale I just discussed: Better hardware utilization means more efficient power use. When you run your own data center, your servers won’t be fully-utilized. Idle servers waste energy. So a cloud service provider can charge you less for energy used than you’re spending in your own data center.
3. LOWER PEOPLE COSTS
Whenever I analyze organizations’ computing costs, the staffing budget is usually the biggest single line item; it often makes up more than half of the total. Why so high? Good IT people are expensive; their salaries, benefits, and other employment costs usually outweigh the costs of hardware and software. And that’s even before you add in the cost of recruiting good staff with the right experience.
When you move to the cloud, some of the money you pay for the service goes to the provider’s staffing costs. But it’s typically a much smaller amount than if you did all that work in-house. Yet again, we have to thank our old friend:economies of scale.
4. ZERO CAPITAL COSTS
When you run your own servers, you’re looking at up-front capital costs. But in the world of cloud-computing, financing that capital investment is someone else’s problem.
Sure, if you run the servers yourself, the accounting wizards do their amortization magic which makes it appear that the cost gets spread over a server’s life. But that money still has to come from somewhere, so it’s capital that otherwise can’t be invested in the business—be it actual money or a line of credit.
5. RESILIENCE WITHOUT REDUNDANCY
When you run your own servers, you need to buy more hardware than you need in case of failure. In extreme cases, you need to duplicate everything. Having spare hardware lying idle, “just in case,” is an expensive way to maximize uptime.
Instead, why not let a cloud computing service deal with the redundancy requirement? Typical clouds have several locations for their data centers, and they mirror your data and applications across at least two of them. That’s a less expensive way of doing it, and another way to enjoy the cloud’s economies of scale.