Cloud costs: why cloud computing turns out to be cheaper

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Is cloud going to cost you? There’s little doubt there’s plenty of hype out there at the moment with countless cloud vendors pushing the marketing message that cloud is cheaper and it’s the way to cut costs.

But talk to IT managers out there and you get a different story, with grumbles that the much vaunted cost savings haven’t happened. One systems manager told me “I've never priced up an implementation for purchase and support which is cheaper by the cloud than it is to deploy physical boxes - even if that is what you are led to believe. “

That’s a story I’ve heard several times now from different IT managers: cloud often ends up costing more as companies struggle to deal with a new economic model.

So, are we to believe that cloud is being pushed by a series of Arthur Daleys, hoping to blind unsuspecting companies with technology, hoping to relieve them of a few quid?

That’s too simplistic. It’s true that in some cases, cloud hasn’t been the cost saver that some have expected, but let’s not dismiss cloud yet. IDC has just released the results of a new study, one that revealed enterprises using cloud could benefit from cost savings. And we’re not talking about just shaving a few bucks here and there: the IDC research revealed that organisations could expect a return on investment of more than 600 percent: that’s some serious money.

There are a couple of caveats here. First of all, IDC only spoke to 11 companies so it’s not a wide-ranging survey (although IDC research is very much in-depth and not just scratching the surface) and second, it was commissioned by Amazon, who had a vested interest in ensuring the results were favourable.

However, I spoke to the analyst who compiled the report and he said that the results were not Amazon-specific and could apply equally to other cloud providers. He said that he’d been researching the cloud for a couple of years and other surveys had returned similar results.

But even if you think that these results can’t be extrapolated to all businesses, the fact remains that at least 11 companies have won themselves massive productivity gains and saved money by moving to cloud – how does that square with the experiences of the managers mentioned above who found moving to cloud would them more money?

There are several plausible reasons for this. One could be the state of the existing set-up: a company with inefficient, fully depreciated servers will benefit from any new set-up, if that replacement is cloud, then cloud will be seen as a productivity gain.

Another issue could be the volume of systems to integrate into the cloud. No two companies are alike: one cloud integration could be simple and a money-saver, while the company down the road could be a nightmare and end up costing more. There might also be different experiences with different vendors too.

Probably the most plausible reason however, is that cloud entails a whole new way of working. Bolting a cloud-based system on to an existing infrastructure will not be the most efficient way of working and businesses who have worked out a way to do this will be the ones who will really benefit from the cloud.

An old Woody Allen joke has it that sex is only dirty if it’s done right – maybe cloud is only thrifty if it’s done right too.

Max Cooter

Max Cooter is a freelance journalist who has been writing about the tech sector for almost forty years.

At ITPro, Max’s work has primarily focused on cloud computing, storage, and migration. He has also contributed software reviews and interviews with CIOs from a range of companies.

He edited IDG’s Techworld for several years and was the founder-editor of CloudPro, which launched in 2011 to become the UK’s leading publication focused entirely on cloud computing news.

Max attained a BA in philosophy and mathematics at the University of Bradford, combining humanities with a firm understanding of the STEM world in a manner that has served him well throughout his career.