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How to Calculate Cost Savings When Migrating to Cloud Platform

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There are still a few misconceptions about cloud computing. Because of this, company managers often veer between two extremes: they either embrace the cloud totally or simply disregard it. The problem generally occurs when the CTO of a company focuses on the infrastructure cost savings instead of taking a holistic approach. Here are a few areas which organizations must look at before migrating to a cloud platform.

Hardware and software costs

This aspect of cloud infrastructure is obviously the beginning point. In the case of dedicated servers, we have to look at the actual expenditure. This includes the hardware, network and data center expenses and the cost of spares in case of emergency. The software expenses would include operating systems, applications and specialized tools. The hardware and software expenses must be calculated on an annual basis.

Cost of scaling and flexibility

Many online enterprises like gaming portals, e-commerce, music streaming and download sites experience fluctuating loads. The cost of adding or eliminating hardware (servers) annually must be calculated. We must keep in mind that opportunity costs must be arrived at using reasonable assumptions.

Salaries to technical staff and maintenance cost

Technical staff salaries are higher compared to other vocations. We must remember that technical staff can be replaced or augmented by using resources provided by cloud vendors, which can be a big plus. Learn more about facilities which can reduce the cost of employing permanent technical staff.

Downtime and efficiency

Online entities cannot afford any downtime. However, traditional data center operations fall prey to error conditions and failures due to several factors. Server overload can lead to deteriorated user experience leading to poor fulfillment. The cost to the company, in such circumstances, cannot be easily determined.

Unified communication

Usually IT infrastructure in any organization tends to be dispersed and distributed. The ownership of these systems and processes is also not clearly defined. This situation can be frustrating for actual users, since there is no accountability and no one is centrally responsible for the entire IT infrastructure. The cost due to this diffused operational condition can be considerable. When contemplating migration to a cloud platform, an organization must unify all operations and bring them under one single communication system. This will benefit the organization and lead to better efficiencies.

A collaborative platform for vendors and distributors

This is an era of collaboration – not only within an organization but also with others outside. Supply chain management systems work well only if the vendors from the purchase side and the distributors from sales are brought together to work closely as a team along with the organization. Cloud infrastructure provides an excellent environment for such collaborative practices.


The cost of running a traditional IT infrastructure is therefore not limited to hardware expense alone. When migrating to a cloud environment, we must always look at the big picture. New systems and processes must be exploited to derive maximum benefit from technology. New opportunities to consolidate diverse operations must be explored. Collaborative environment should be nurtured and consciously developed leading to better efficiencies. Embracing cloud computing is a matter of having a mindset geared towards advancement and future growth.

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About the Guest Author:

Sankarambadi SrinivasanSankarambadi Srinivasan, ‘Srini’, is a maverick writer, technopreneur, geek and online marketing enthusiast rolled into one. He began his career as a Naval weapon specialist. Later, he sold his maiden venture and became head of an offshore Database administration company in Mumbai. He moved on as Chief Technology Officer of one of the largest online entities, where he led consolidation of 300 online servers and introduced several Web 2.0 initiatives. He holds a Master’s degree in Electronics and Telecommunication.

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