saving money in the cloud

Cost Benefits of the Cloud

| October 21, 2020

When discussing the move to the cloud, the first thing you hear is, “There is such an amazing cost savings.” It’s the first thing you hear because it’s true. Still, what does that actually mean in dollars and cents and what will it mean over time? It is, of course, best practices to do a Cost-Benefit Analysis to compare your current IT outlay versus cloud pricing. This will provide quantified data that supports your move to the cloud. 

To begin calculating the positive effect moving to the cloud will have on your business, you must first determine the direct and indirect costs of your current IT expenditures.  

The direct costs will be relatively easy to calculate as these deal with what you have paid in recent years and are currently paying for your IT needs. Then there are the indirect costs. While not as easy to calculate, they can be estimated and need to be considered as part of your Cost-Benefit Analysis. 

Direct Costs – These are the detail line items that total your current expenditures on IT. Typically, they fall into three categories: 

  • Physical costs – This includes all the hardware, servers, on-premises housing, supplies, spare parts, wiring, physical security. It should also include your software licenses, warranties, network bandwidth, both data and backup storage and any other items of your IT infrastructure. 
  • Operational Costs – Cost of operating and maintaining your servers, emergency repairs over the past three-five years, maintenance contracts, staffing, internet connectivity as well as the other expenses attributed to IT. 
  • Administrative Costs – Those costs required to maintain your IT and are typically found in other areas of your business. For example, human resources, accounting, and purchasing – those areas even if partially, that work with IT.  

When you compare these direct costs with cloud pricing, you will see a dramatic savings, reduction in overall expenditures, and even removal of many line items. 

Indirect Costs – This current outlay of finances can be more difficult to itemize but need to be considered. They too tend to fall into three main areas that will be dramatically improved by moving to the cloud: 

  • Productivity – One way to measure your current situation is by calculating the amount of time lost due to the computers, systems or other IT infrastructure going down, how long it is down and how many employees and customers were affected by these interruptions. Then calculate the frequency these interruptions have occurred. 
  • Security – The expense of breaches, malware removal, inappropriately outdated security software, recovery of backups and any other cybersecurity attack or issue that has hit your business and drained your resources. 
  • Employee Search and Retainment – Accounting for the loss of employees due to frustration and exasperation in dealing with troublesome IT systems and the cost to replace or retain staff. 

The consistent reliability of the cloud will also bring dramatic cost benefits by improving productivity, expanding security measures, improving customer relations, and enhancing employee morale.  

While the improvements to your indirect costs may not be viewed as immediately as direct costs, they will appear in a relatively short amount of time. 

To accurately complete the comparison, you need to meet with a trusted managed IT services provider. They are the experienced team that can help you estimate your cloud pricing and guide you through the cloud procurement and implementation process. 

A managed IT service provider will also demonstrate and calculate the savings and benefits you will experience by moving to the cloud. 

The experienced team of IT experts at Concensus, is the trusted managed IT services provider that can monetize, consult, plan and implement your move to the cloud. Contact us to find out more how moving to the cloud will dramatically improve your business. 

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