As cloud computing becomes increasingly prevalent in today’s landscape, businesses try to keep up with the rapid advances in technology and the benefits of the new era. It should come as no surprise that the cloud technologies change over whole traditional systems. The compatibility and flexibility that comes with cloud computing obviously help businesses improve their strategic positions and competitiveness. The questions that almost all businesses ask is: why, when and how to move to cloud? However, probably the main question when it comes to evaluating the cloud is the cost associated with migrating to cloud. The important point of calculating cloud’s true cost is that costs are not only in financial terms. The strategic factors such as opportunity cost, time to market value and more are the factors that distinguish cloud computing technologies.
Cloud vs. On-prem: Financial Costs
System Hardware and Software
Having an on-premise server or data center means high initial costs associated with capital expenditure. These are mainly defined as CapEx, which are one-off upfront expenses made by the companies. Organizations purchase various equipment and hardware based on the estimated-decided capacity levels. On the other hand, compatible softwares are needed to operate on those hardwares, which means initial upfront license expenditures as well.
When it comes to running on cloud, businesses don’t have to handle these requirements, since the cloud vendor is responsible for the underlying infrastructure. The pay-per-use pricing basis of cloud computing refers to monthly rental of these resources, thus meaning an operating expense for the companies, OpEx. Cloud computing allows companies to disburden high initial costs for such investments.
Maintenance
Alongside the purchase of required hardware and software, firms have to consider the effective maintenance of such resources to keep their operation performance going well??. This might mean renewal, repair or upgrade of hardware, based on their useful life time. Alongside hardware maintenance efforts and stepped costs that emerge with each maintenance effort, software upgrades are also costly in terms of money and effort. Upgrading the mission critical softwares hugely affects the business continuity, which can lead to organizational and operational slow down.
HVAC and Physical Security
Heating, ventilating and air conditioning -HVAC for short- is very critical for maintaining on-premise systems and running on them. Companies are responsible for investing in such technologies and of course sufficient physical spaces for their data centers. While these investments could be huge when initially implementing and renewing, additional physical security is required to ensure the protection of business and sensitive data within the company. However, cloud computing removes the risk of security issues and physical investments for the underlying infrastructure. Cloud vendors committed to being responsible for the security of the cloud, and managing their own data centers with large economies of scale, so that companies can rent the needed resources without physical investments.
Workforce
While maintaining system hardwares, softwares and physical infrastructure requires huge financial investment, a significant amount of work hours and workforce should also be dedicated to manage these investments and operations. These efforts are not just made initially, but rather a considerable amount of work time is spent on these areas within companies to continuously run their systems. Cloud computing helps companies leverage their workforce, since any operation within the cloud is as simple as just a few clicks. Organizations can focus on the effective management and profitability of their business and technical operations through reduced workloads with cloud computing.
Cloud vs Onprem: Strategic Factors
Scalability Costs
As businesses grow and expand, the need for scaling their operations and data up emerges. However, scaling up means ordering, building and installing all resources (CapEx) again with the increased need. Alongside of the step cost occurring from these re-investment, this process also takes high levels of effort and time. The duration of scaling up the existing on-premise data center means slower response to changing business and market structure. Lower flexibility in such cases means lost opportunities for businesses, which eventually damage their competitive edge.
Downtime and loss of productivity
Businesses that own their on-premise data centers are responsible for the service uptime and management of any risks of disruption. This also creates another critical task to focus on, since service disruptions may lead to various levels of downtime and affects business continuity negatively.
However, service uptime and availability are the primary commitments of cloud vendors, when businesses run their operations on the cloud.
Mobility
The new work culture and needs for flexibility for productivity makes mobility even more important. However, on-premise servers or data centers fall behind when it comes to mobility by their very nature. Security and access management become complex in such systems.
Disaster recovery
Organizations that have their own on-premise data centers are fully responsible for their data backups to ensure protection of important data and mission critical workloads. However, cloud computing offers the ability to automatically update whole data on a chosen basis for disaster recovery. Cloud vendors do so through backing up instances in various physical locations they own and manage, which is highly trustworthy when compared to the effortful manual disk backups undertaken in traditional systems.
Innovativeness
An implementation of new technology involves the cost evaluation, decision and deployment processes which aggregates to really long time in traditional IT operations. Given the everly increasing speed of technological progress, on-premise solutions often cause companies to fall behind of such advances in technology. However, cloud services are easy to experiment by their very nature. You can implement and experiment with various services offered by cloud vendors, and build your technological strategies which supports your long term business goals and financial target. Cloud services give businesses the ability to improve and optimize their technical operations continuously without any sunk cost or risky investment.
by Deniz Güreler
