Does cloud computing save money?

20 04 2009

This is something I have been looking into quite a bit in the past 6 months, and though reading lots about the “cloud” suggests this is the case, I have always had my reservations. For me there is a distinct difference between cloud based services, and the cloud itself.

Cloud Services

This is basically software applications that operate in the cloud (SaaS – Software as a Service). Here I can see many cost saving benefits, simply due to licensing and usage. For some time there has been a distinction between “dedicated” licenses and “concurrent” licenses, the second being basically licensing on demand. We have always sold our own licenses for software, such as workFile, workFile EPOS etc on a “concurrent” basis, allowing a 1-10 license model. This means you can have up to 10 users for 1 concurrent license, effectively providing large cost savings.

Cloud Networking and Storage

Ahh, outsourcing your actual hardware and storage capacity requirements. Now here is where my main reservations lie, simply because of cost analysis never seems to be quite right. I have always thought that the more space I used up “in the cloud” would cost more per month, so the larger the organisations requirements, obviously the cost of their “cloud” services would increase. I also believe that the larger the requirement the more cost “ineffective” the cloud could potentially become. I have to be honest, most of my thoughts on this were based on our own hosting programmes that OD Media offer, and our own cloud solutions based on workFile.

Concerns proved?

Today I see that a McKinsey study actually proves my concerns. Let’s face it, large enterprises are not going to commit all their data storage and networks to the “cloud”. So, realistically there will be some hybrid requirement, if one at all. Because of this there really just isn’t any large saving to be made for larger organisations, sure if you outsource everything there will be an admin saving to be made, but since this realistically won’t happen, that saving is negated.

Small businesses? General Public?

This for me is where cloud computing services should be aiming, and in the purest form, cloud computing has been aimed at these areas for some time, just think of outsourcing your website…

There are savings to be made for small businesses, especially if using SaaS. Our own workFile ECM SaaS does provide significant cost savings to small businesses.

The general public will always make savings with SaaS, though with the “cloud” storage I am not so sure. At the end of the day, most members of the general public will purchase a mass storage device, which is more than adequate. So again, SaaS is the only real benefit I see…

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6 responses

23 04 2009
Robor

Hi,
Amazing! Not clear for me, how offen you updating your andrewonedegree.wordpress.com.
Thanks
Robor

11 05 2009
Andrew Smith @onedegree

I try to update my blog once a week, however the past couple of weeks I havent been able to do this. Back to normal now, so will be posting again once a week, usually on Fridays….

6 05 2009
I Shed T h i r t y P o u n d s in Thirty Days

Hi, nice post. I have been wondering about this topic,so thanks for blogging. I’ll certainly be coming back to your site. Keep up great writing

18 06 2009
When the cloud provides savings « Andrew One Degree’s Blog

[...] is something I have posted about in the past; http://andrewonedegree.wordpress.com/2009/04/20/does-cloud-computing-save-money/ and is something that more and more people are talking to me about…So, does the cloud [...]

5 08 2010
Pete Lundin

Siting is definitely one of the most important factors that affect the energy consumption and thus the costs of computing. There are places with cooler climates than in the continental US and with more green electricity available. I would recommend anybody considering siting a datacenter to take a look at the Finnish website on these issues: http://www.fincloud.freehostingcloud.com/

7 09 2010
Eric Myers

Thanks for the review. I am a small business owner who has been on the fence about this for some time. I am interested to still learn more about this, but I think I am convinced enough to give it a try for my business. Thanks.

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