Techblog
Cost saving tips with Cloud Computing
You don’t realise it, but you use cloud services every day. Find out some of the reasons why SMEs out there are turning to it to drive down software costs, and how you can adapt it to your needs.
By the myBusiness techblog team
You may not know it, but there's a high chance you use the cloud every day. If you’ve used Gmail, LinkedIn or perhaps Salesforce.com at work, you're using software that sits in a server somewhere else, streamed to your computer wherever you are through the convenience of your browser. That means it isn’t installed on your PC itself, and you can access it as long as you have a browser and Internet connection.
On the backend, your IT department may also rely on cloud services. This can be in the form of remote storage, or tapping additional computing power off cloud servers.
Why is this concept interesting to businesses? The biggest selling point is that it frees up valuable resources in the form of manpower and maintenance, and that translates to cost savings.
To maximise savings, SME owners should understand how the cloud can fit into existing operations.
First, the costs of maintaining software in-house can be quite material to smaller businesses. Companies need to constantly acquire and update software licences to cover all of its staff. If there is a sudden hiring spree, the IT department needs to quickly get more licences for the new headcount, which can be cumbersome and a waste of man hours to manage. Cloud software, on the other hand, just takes a login account and you're all set.
Take Singtel's office and communications solutions in the cloud. New employees can easily be added onto the office system on their first day of work, and everything is managed by the provider.
Beyond software licences, the software needs to sit on hardware within the company's premises. That means costly capital expenditures upfront to purchase those servers and hard drives—costs that could be rechannelled to other purposes for smaller firms.
Using the savings calculator, you can see an illustration of how a five-man team would have to spend on a central server costing $3,000 upfront. Next, software licences would cost about $2,950, plus $2,400 to maintain IT personnel. All of these costs are offloaded onto the cloud provider when you subscribe to a cloud service, resulting in drastically lowered upfront costs.
Furthermore, when that hardware fails, there is disruption to the business. SaaS firms often offer 99 percent uptime, and make it their priority to maintain constant backups of customer data so that there is no pause when servers go down. Taking this risk off your hands can be a huge relief on resources for an SME.
Third, as cloud vendors out there compete, they are slashing prices all the time. One of the larger cloud infrastructure providers globally has cut its prices for the 21st time in six years, it just announced. This is good news for customers because large vendors are reaping economies of scale by providing software en masse through the cloud, and that trickles down to customers.
Back home, Singtel provides an on-tap cloud infrastructure service called ezCompute that will provide storage and computing power within minutes through its website.
Companies should decide what they store in the cloud, however. The benefit of cloud storage is the ability to have it on-hand, ready in an instant. It shouldn’t be used for long-term archival, because of the running costs of that. To compare, a 1 terabyte hard drive costs about $200 on average. It's greater upfront cost compared with cloud computing, but the operational costs will even out in about a quarter.
And the cloud's benefits go beyond just storage and software maintenance. Apps like video streaming and collaboration come with additional costs such as maintaining the network bandwidth to power them.
In a recent survey by IT company CDW, it was found that 40 percent of large businesses and governments are going to the cloud because of conferencing tools. The sheer simplicity of going to the cloud for an on-tap service that is ready was far more palatable to companies.
Still, not every company can live on the cloud alone. Some issues like compliance stand out—some data needs to be kept within a company's four walls, by law. Some companies also want to save their data in-house, on cheaper hardware than incurring a running cost to the cloud.
Understanding that the cloud is not a silver bullet will help you balance expectations of how cloud computing can help. The cloud has its plusses and minuses, but if you plan its place in your company well, you stand to reap the full benefits of the cloud.