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Can You Really Save Money with Cloud Computing?

10 mins read
written by
Dhoof Mohamed

Cloud Computing has moved from a lot of hype to more mainstream use in businesses. Yet, many business leaders are still not sure if it makes sense for them. The answer is “yes” more often than it used to be. However, it is important to know why you are doing it.

One of the areas where the cloud makes sense for most businesses is in hosting applications, such as email, CRM, and calendars. There is a big benefit from having access from many different devices and it is cost effective.

Using a cloud application is a lot like renting space in an office building. You could buy land, design a building, erect it and manage it, if you need office space. And there could be cost savings at some point when you filled it to capacity. However, there are two problems: (1) You have to build a full building even if you only need a partial one currently and (2) You need to know how to build and manage a building for this to work out well.

Instead, it typically makes a lot more sense to rent space in someone else’s building. The same is true of using applications through the cloud. You could make a big investment up front, buy software and a server, and hire someone to set it up and manage it for you. The challenges are the upfront costs and you are now in the IT business when that is not your core business.

So, for most small to midsize companies, cloud applications make a lot of sense because:

1) You only pay for what you use

If you have 5 email users, you only pay for 5 licenses. As you grow to 25 users, then you pay for 25. You eliminate the upfront cost that comes with buying and setting up a mail server and all of the maintenance and upgrades that go with it.  At some point, you may get to a size where hosting your own mail server makes more sense. However, that is not the case for most small and midsize businesses.

2) You stay focused on your core business

Even as an IT service provider, we find it makes more sense to use a cloud based ticketing system than hosting it in-house. Our technicians are focused on helping our clients with their IT issues. It would only be distracting for them to have to worry about managing the software and hardware for our ticketing system.

One of the best times to consider migrating to a cloud application is when you are looking to add an application or upgrade your current solution. This is when you are most likely to realize cost savings.

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