Impact of Cloud Computing on Business

Cloud solutions offer a range of economic benefits to their users and to the economy as a whole. In particular, it has the potential to help growing businesses and organizations from having to spend more capital on their information technology requirements.

Forrester research has predicted a global economic diffusion of cloud computing with the market growing in 2018 from $117 billion to $162 billion in 2020.

Business drivers of cloud computing

Cloud computing is a cost-reducing technology that allows small and medium-scale enterprises to contribute to the economic growth by strengthening their pro-activities and productivity.

Among the several economic advantages of cloud computing, the on-demand and pay-per-use pricing models help convert fixed cost into marginal cost. The cost savings realized can be used to start a new business which in turn could facilitate more job opportunities, innovations and macroeconomic growth.

Some key business drivers of cloud computing adoption include:

Help to pursue new business opportunities : This drives improved customer relationship by providing a platform to locate and interact with potential customers over the internet.

Upfront costs reduction : This reduces capital expenditure costs that include the cost of computer systems, physical data center and technical staff. The organization only pays for the computing resources actually used and makes a few reasonable operational expenditures.

Potential improvement in business continuity : With guaranteed available and efficient network connectivity, cloud ensures seamless availability of computing infrastructure with its increased capacity for improved disaster recovery.

Potential reduction in carbon footprint : Inevitable provisioning of electricity and air conditioning is greatly eliminated due to the efficient use of computer resources with limited demand for electricity and air conditioning.

Business users expect the cloud to assist them in the following ways

  • Meet customer cloud performance requirements for more and improved services.
  • Innovate via mobility and ubiquity of cloud-based resources and great technologies
  • Lower business operational costs through operational excellence
  • Improve financial performance and its basis for competitive advantages
  • Focus more on core competencies by redistributing the non-tangible activities and saving more capital.

Costs associated with use of Cloud Computing

Sever costs : A server has the capability to support a number of workloads. However, support costs grow as the disparate workloads of the server grows.

Storage costs : Costs associated with the requirements of the storage hardware can contribute to a rise in storage costs. the storage costs vary based on the types of applications, including email and complex analytics.

Network costs : These costs include costs of incurring additional bandwidth requirement if an internally-hosted web app needs to be moved into the cloud.

Backup and archive costs : The backup and archiving strategy, the personnel responsible for the backup, the amount of cloud-based backup required, and cost of making contingency plans are all direct influencers of backup and archive costs.

Disaster recovery costs : This is an extra cost from the cloud service provider towards disaster recovery responsibilities.

Software maintenance costs : The potential cloud user must be aware of this cost and plan as required.

Platform costs : This is basically a component of the overall annual cost of maintaining the platform and operating systems. Examples of platforms and systems include Windows, Linux, HP-UX, IBM z/OS, AIX.

Support personnel costs : This cost includes the cost of the staff support for everyday operations.