As the concept of cloud computing is being gradually adopted in various enterprises, there are still a number of misconceptions people associate with public cloud hosting. One of these concerns is: does it bring about true cost reduction or is it a mere cost transfer?
Corporate decision-makers are constantly looking for ways of cutting the costs of running their businesses. And when cloud computing comes along, a few companies have reportedly utilized cloud technology to reduce their overhead cost. But how did they do it?
Depending on the size and the nature of operations, companies normally establish in-house IT systems that handle a list of on-going activities which include but are not limited to e-mail, data processing, data storage, communications, e-publicity (electronic publicity), decision-making method and IT marketing Applications. All these IT systems’ functions are primarily hosted in-house which, in most cases, cost lot to implement, maintain and customize in order to necessitate greater productivity.
A public cloud is one type of Infrastructure as a Service (IaaS) which gives business managers the opportunity to have their IT managed by external providers. In practice, this is expected to allow companies to reduce expenses for purchasing, implementing and developing software (both required at the end-user workstations and the server-level), servers and their accompanying hardware, firewall infrastructure, media outlet, storage facilities (which include series of hardware back-ups and back-up servers for security), facility accommodation (or space), and concurrent personnel expenses (that is, salaries, benefits and payments for consultants). Utilizing a public cloud service should takes the responsibilities described above from the shoulders of corporate IT managers and allow them to focus on their core business.
In principle, cloud computing provides a “buffer experience” for corporate executives in the sense that they do not necessarily need to bother about managing somewhat complex in-house IT systems, and they could enjoy peace of mind knowing fully that their IT structures are hosted securely in an external and non-intrusive environment where they have unrestricted access to their IT infrastructures. Incidentally, this practice helps business managers to save cost on their IT applications. However, some pundits have argued that this is not always true. Some believe that hosting a company’s IT systems in a public cloud denotes a “mere cost transfer” from the company to the external cloud-technology providers. Could this observation be true?
Typically, a mid-size company is expected to spend between $130,000 and $200,000 a year on its IT set-ups; look at this important breakdown of its possible yearly capital expenses.
Pre-Cloud Technology Adoption Expenses
| Description |
Cost ($) |
| Software & Hardware (purchase, implementation,
customization) |
50,000 |
| Servers and Server’s maintenance |
40,000 |
| Personnel Expenses (salaries etc) |
40,000 |
| Total |
130,000 |
Post-Cloud Technology Adoption Expenses
| Description |
Cost ($) |
| Software & Hardware (purchase, implementation,
customization) |
30,000 |
| Servers and Server’s maintenance |
None |
| Personnel Expenses (salaries etc) |
None |
| Public cloud hosting & other services |
60,000 |
| Total |
90,000 |
It is possible for businesses to save on their IT infrastructure costs through the use of public cloud services because they only need to pay for the resources they actually use, rather than having to purchase additional capacity in case usage increases owing to business expansion or other factors.
Public cloud computing provides an opportunity for “agile IT” system, which allows businesses to increase or decrease resources (processing power, memory and storage capacity) based on their business requirements. This flexible scalability is not possible in a rigid in-house IT structure.
One thing to note is being able to identify the particular needs of the organization in order to maximize the use of resources. Once needs are identified, then the structure can be created so as to reduce resource wastage.
There are several ways on how to configure the public cloud; here are several
examples of public cloud configurations commonly used by business users.
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About the Guest Writer:
Jerry Olasakinju, a Bachelor of Technology (B.Tech) degree holder, is a passionate researcher and writer whose interest in everything computing is unparalleled. He blogs about his literary works at
http://jerryolasakinju.blogspot.jp/
