Published on the 25/02/2014 | Written by Newsdesk
Companies are failing to exploit the full value of cloud computing by signing up for contracts which simply provide facsimiles of their on-premise solutions…
When technology vendor Dimension Data moved its own internal operations to the cloud it analysed the numbers. According to David Hanrahan, general manager of cloud services, the company estimated that to replace its on-premise systems would have cost $1.4 million in capital expense – but by the time the company added in maintenance, support services, time to market, the cost of capital, power and cooling and equipment refresh cycles the total cost of ownership would be $4.2 million over three years.
There were clear savings from moving to a cloud replica of its on-premise solution – that would cost $2.8 million over the same three years. But he said by striking contracts for more elastic cloud computing services which provided access to peak computing services only when they were required costs could be reined in to as little as $0.9 million over three years.
While many enterprises moving to the cloud extol the flexibility and agility that cloud can deliver, the cost savings remain a particularly compelling argument to take to the board. Ovum has just released a new report noting that the rate of cloud adoption is accelerating, driven again in 2014 by cost considerations.
Listed software vendor Technology One, which has also moved its own internal operations onto a cloud computing platform, last week said that it had so far achieved 30 percent cost savings, and executive chairman Adrian Di Marco said he believed that could be improved to 40 percent savings.
As a result of moving off in-house systems to largely software-as-a-service offerings from vendors including Google and Salesforce the organisation had managed to halve its IT staff, and ditch the $800,000 a year it was investing on disaster recovery as that was now provided through the service level agreements with SaaS vendors according to Di Marco.
These are compelling pointers for other businesses considering a move to the cloud, and helping to drive the Australian cloud computing market which IDC has forecast will reach $2.5 billion by 2017.
Di Marco acknowledged that he had underestimated the speed at which enterprises would embrace the cloud and that “four years ago we had no interest in being a cloud company”. He described the current migration as “the next big gold rush in the industry,” but urged companies taking the plunge to carefully vet their suppliers as there were “many people offering very mediocre products”.
