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Understanding Cloud ROI

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The cloud can save you money. That’s a statement almost everyone agrees with.

At face value, “saving money” by moving to the cloud means freeing up internal resources – like time and dollars – that were formerly dedicated to maintaining infrastructure, and instead reallocating them to higher-value activities such as research and development. Cloud providers often deploy low-cost commodity hardware with a layer of software-based management, which allows for many customized configurations. Because of this, moving to the cloud will often increase the return on your technology investment.

To calculate your cloud ROI, you’ll need to consider factors that are relevant to your enterprise application portfolio and specific computing needs:

First, your ROI analysis should take several broad considerations into account, including the cost per unit of computing power; the tradeoff of the amount of labor necessary to redesign applications that need to operate in a cloud environment; and intangibles such as time.

Moving to the cloud also adds new factors into the ROI equation that require thinking beyond the realm of items like capital acquisition, licensing of software and depreciation. For example, users only pay for what they use with a cloud platform, and you can see exactly what the power is costing you through the transparency of a cloud provider’s interface. Another prime cost benefit of the cloud’s economy of scale is the ability to scale up and down quickly, across a number of investments.

Cloud computing can create a significant return on investment, affording energy, licensing and administrative costs, and it frees up capital and personnel to innovate on new ideas quickly. Moving to the cloud is a transformational investment, in every sense of the word – but it’s a move that many of today’s organizations find compelling.

For more on the ROI in the cloud, download the white paper “Understanding Cloud ROI Factors” now.

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This is a post written and contributed by Rackspace Blogger.

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  • http://NetCentricity.com Steve Houston

    Nice summary, Paul. From a historical / conceptual perspective, cloud computing – although vastly more robust today – really isn’t anything new. ASPs, or Application Service Providers, have provided remote application access to clients for well over two decades. They’ve clearly proven their value over time by eliminating the need for companies to engineer, operate and maintain costly one-off applications needed to run their businesses.

    What’s particularly exciting about the cloud, though, is that it now goes far beyond just these stand-alone applications. Entire IT infrastructures can be virtualized and leveraged by organizations that need enterprise-class computing horsepower but wish to minimize many of the related overhead costs.

    Companies heavily reliant on technology have never had a wider range of scalable and cost-effective IT solutions to choose from than today’s cloud offerings. Those that want to steer major capex investments towards other aspects of their businesses and focus instead on their core competencies are those that will embrace the cloud and reap its significant rewards.

  • Paul Croteau

    Thanks for your feedback Steve, you make valid points. What’s old is new again, but with more options. :-)

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