Any discussion of cloud computing for a small or midsize business revolves around two central issues: function and cost. Too much of both bankrupts a company, too little and the benefits of cloud computing can’t be realized. Balance is required but it’s no easy task, especially as providers cry out with siren calls about how their solution costs less the next guy and can help reduce your IT budget.
But here’s the thing: they’re lying.
What it Really Costs to Move Up
When cloud providers try to sell a company on their services, they’ll often start by talking about the price of running a private server. Initial costs to purchase hardware are higher than the monthly fees paid for cloud access and over time this hardware may fail, become corrupted and inevitably need an upgrade. Clouds, say smooth-talking salesmen, offer a continuous cost but one that can be adjusted as required. True enough, but even taking into account a private server running 24/7 and the IT expertise needed to manage it, cloud services end up with a higher dollar value once the numbers get hashed out.
In an October 4th TechWorld article, Martin Saunders of Claranet (speaking at the recent Apps World summit in London), said that “people understand that cloud isn’t cheaper. It is always going to be cheaper for a company to buy a server, stick it in server room and run it.” He went on, however, to argue that if that’s all a company focuses on then they’re “very much missing the point of what this thing is all about, because it’s a service. It’s not just about buying infrastructure and hardware.” As an immature technology, costs of the cloud were talked up instead of its features but with more robust offerings now in place from the likes of Microsoft, Amazon and Oracle, small and midsize businesses need to change the way they look at their cloud options. In other words: budget isn’t everything.
Pinching Pennies
Cloud providers aren’t ignorant about the need for cost savings – Amazon, for example, recently introduced a cost allocation process that lets admins track server instances and cloud stacks and discover what, if anything, can be cut. But even the best cost-cutting measure won’t make up for the monthly price tag associated to cloud computing, especially as the needs of a business grow.
Seeing a benefit in greater cost is a tough job for many chief financial officers (CFOs), especially in an IT industry that’s just starting to find its footing again. But as Ron Fraser, chief technology officer (CTO) of Microsoft’s cloud services points out, “there’s two personalities to the cloud.” Personality one is the internal voice of a company: it says spending more money for a glorified, redundant server isn’t worth it. Personality two is the external voice and recognizes cloud networks provide access to the same kind of infrastructure as big players and allows smaller organizations to take on even industry giants, especially since they’re not bogged down by legacy software.
Now regarded as an adolescent technology, the cloud offers benefits greater than cost reduction that in the long term are far more valuable. Higher capital expenditures over time are typically offset by the agility and redundancy of the cloud, leading to profit growth in other areas.
Doug Bonderud is a freelance writer, cloud proponent, business technology analyst and a contributor on the Dataprise website.
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