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Financial Benefits of Cloud Adoption

by Wayne Roye

by Wayne Roye

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Cloud adoption or hybrid IT is often considered attractive and “a good thing” but more than 50 percent of enterprises do not take the time crunching up the numbers to get the particular financial figures. Companies often choose the cloud because it is cheaper and easier, but it’s important to understand how that works.

Financial benefits can be classified to two main criteria: (1) Cost of ownership; and (2) Improvements in team agility.

1. Cost of Ownership

Cloud adoption reduces the cost of ownership resulting to so-called “hard cost savings.” It comes from the reduction of the following, among others:

  1. Replacement of on-premise hardware
  2. Downtime
  3. Upgrade costs
  4. Disaster-recovery costs
  5. Service-level agreement penalties
  6. Deployment costs
  7. Operational support costs
  8. Selecting of vendor software costs
  9. Requirement analysis costs
  10. End-user training costs

2. Improvements on Team Agility

Cloud gives your company the ability to adapt to new environments without strain or cessation of activities. For example, a sudden change of work-venue, work-from-home policies, natural disasters, cybersecurity-induced reshaping, power outages failure, and more. Financial rewards are hard to quantify because this is a type of intangible benefit, but these questions can help:

  • What is the total benefit of faster software lifecycles?
  • How do you measure the speeding up of application development?
  • How much did human errors and outages caused to your organization?
  • How will you benefit from a system that immediately reports any condition that is likely to indicate a failure (fail-fast model)?

These questions are hard, but companies that invest in asking and getting good answers end up with tangible benefits.

After a major switch to the cloud, one software development team at a large financial services company saw its productivity increase by 10 percent.

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