Cloud Computing key benefits

July 29th, 2010

Like any good consultant or analyst, you can summarize the key benefits in three easy statements: 1) cost, 2) computing on-demand or scalability, and 3) access to expertise on virtualization and technology. 

The entire business model for cloud providers is to achieve economies of scale and provide processing power at a very low price.  It is not difficult for companies and their IT departments to see significant cost savings by going into the cloud.   Scale allows the unit price for processing to go down from the start.   This is no different than when companies outsourced their mainframe operations.  It remains less expensive to run multiple companies on the same mainframe than to own and operate a single mainframe for a single company. 

 Companies can reduce variable expenses with fewer IT staff and less capital if they don’t have to constantly update their IT systems to keep up with the times. Keeping up with the times means constant technical training. 

Second, and somewhat related to the cost savings, under cloud computing you get the computing power you need, instantly when you need it, and you only pay for what you need (just like electricity).  Under the old model, for companies that managed their IT internally it might be necessary to over-purchase computer resources to meet spikes in demand during the year.  Under normal IT capacity planning performed by companies, you will always buy more than you need to handle peaks. 

The third benefit is expertise and state-of-the art technology. Some cloud providers are experts at running data centers and doing data processing. In many cases they can do this job better and more efficiently than organizations can do on their own. In addition, some cloud providers provide state-of-the-art technology to their customers. Companies with legacy systems or software that is several versions behind can benefit by getting rid of their antiquated IT infrastructure and leveraging one that is current (and that is typically being updated on a regular and ongoing basis).

Let Daniel L. Ruggles  and the team at PM Kinetics, LLC help you understand and navigate the complexities of Cloud Computing, Sourcing and Capital Planning, Vendor Management, IT Security, Infrastructure planning and execution.