The Cloud’s Hat Trick: Three Cloud Benefits That Are Driving Up Value Beyond CAPEX Reduction

Back in 2012, we assessed the value of cloud applications, finding that they delivered 1.7 times more Return on Investment (ROI) than their on-premise counterparts. We recently updated our research, showing the value has grown to 2.1 times more ROI for cloud apps – an increase of nearly 25 percent.

Where many technologies diminish in value over time, the cloud is still climbing. That’s because the cloud delivers multiple benefits that continue to add value. While reducing the initial Capital Expenditure (CAPEX) for software was the leading benefit, it is not the only one.

It would seem cloud computing is no one-trick pony. In fact, it’s got three strategic areas beyond CAPEX reduction where it is scoring big. Hockey fans might call that pulling a hat trick – three scores in one game.

It’s Still About the Savings

Beyond the CAPEX savings in equipment and hardware costs, the cloud continues to deliver great cost advantages and enable new business opportunities. First off, it breaks the upgrade cycle. Companies no longer have to find a solution that will stretch for several years into the future before they can upgrade to add new functionality. With the cloud, beneficial new features are pushed out as available. No more lengthy deployments for the next version. This saves both time and money.

Our report found a drastic reduction in costs for consultants for cloud apps. A 63 percent decrease in initial consulting and deployment costs, with a 55 percent reduction in personnel to support cloud apps vs. on-premise. In addition to cost savings, this helps a business to focus staff resources on core competencies.

Plus businesses can change course more easily. Switching from one cloud app to another is much easier and cheaper than changing from one on-premise solution to another. I’m not sure vendors are so thrilled with this, but it is driving competition and leading to even better applications. And it gives businesses a new flexibility to constantly monitor and select the app that delivers the most value.

Security!

Data security is perhaps the most challenging IT issue today. A breach is not only costly to repair, but can irreparably damage your business reputation. And yet the proliferation of malware and hackers constantly raise the stakes.

Early cloud apps were not necessarily known to be very secure. In fact, many businesses hesitated to embrace the cloud out of fear that data might be more vulnerable. Cloud service providers have largely addressed this and cloud security now is often better than protecting on-premise resources.

Call it economies of scale, but a cloud service that manages data for numerous companies has the resources to protect the repository. In fact, security has gotten significantly more sophisticated and is greatly outpacing what an individual business could do on its own. In our recent Buying Intentions Survey for Security, we found that companies embracing a cloud strategy typically spend 22 percent less for on-premise and other point security technologies than their peers who haven’t moved to the cloud.

Why waste precious IT dollars and staff resources constantly looking for better ways to repel hackers when the cloud providers are doing a better job anyway? Embrace it and get more value.

Sustainability

IT solutions that are environmentally beneficial are not only good for the planet. They are good for your business. Our research found that cloud computing uses 91 percent less energy than on-premise solutions. That’s a significant reduction, especially for industries that have high demands.

And think of all the hardware that is eliminated by cloud computing. Most equipment is centralized in data centers managed by cloud providers, as opposed to every business building to peak needs. Plus being sustainable is an important business benefit in itself that can improve your brand.

Bottom line, the cloud is no longer only about reducing initial capital expenditures. It’s the triple benefit of on-going savings with optimal solutions, better data security and a more sustainable solution. The value continues to climb, explaining why the cloud is not a wave. It’s a sea change.