The cloud conversation today centers on business differentiation (discussed in my previous post), increased efficiency and ability to innovate, and freeing current IT staff to focus on other projects. But cloud can also reduce IT costs, as I will explain in this post.

Based on our research, 47 percent of business executives indicate that the greatest issue they face with their legacy systems is cost. In response, organizations are looking to cloud expecting agility and cost savings—and rightly so.

To realize potential cost benefits, Financial Services Institutions need to simplify their IT infrastructures, accelerate time-to-market and drive innovation, enabling them to generate unmatched business value. Cloud presents unrivaled opportunities to deliver against these imperatives, while simultaneously improving efficiency, agility and scalability, and reducing total cost of ownership (TCO).

Cloud enables efficient, on-demand and convenient access to IT services. As a “pay-per-use” economic model, cloud offers new financial management controls and increased visibility over IT spend. A cloud-based environment allows flexibility and speed-to-market traditional infrastructure cannot match.

So, where do the cost savings come from?

Cloud cost-effectively bundles application development, maintenance, support and infrastructure services. Clients pay on a consumption basis and receive scalable support and development services to meet their demand, as needed. Clients can expect significant cost savings through increased business agility and cost flexibility inherent in cloud services.

The cost savings of cloud are realized largely by shifting IT costs from upfront capital expenditures (CapEx) to ongoing operating expenditures (OpEx).

  • CapEx is an expense with a benefit that continues over a long period. Such expenditure is of a non-recurring nature and results in acquisition of permanent assets.
  • OpEx refers to an upfront investment that allows a business access to goods or services while only paying for what it consumes.

Another benefit is removing the need for owning and managing a data center—a large group of networked computer servers typically used by organizations for the remote storage, processing, or distribution of large amounts of data. In addition to providing artificial intelligence (AI) and blockchain capabilities, cloud lets a business manage their data without building and owning a data center, and all the requirements that come with it, such as hiring, training and promoting staff. Cloud also lets businesses simplify:

  • Disaster recovery
  • Employee management
  • Implementation of applications and patches
  • Creation of new applications
  • Going through failures before perfecting a process

There are also many new applications—especially industry-specific ones—that are exponentially increasing the range of opportunities for revenue and savings. But these technologies—along with advanced analytics—do not happen without cloud’s flexibility, reliability, security, massive capacity and scalability. Cloud provides the firepower for analytics that is already turning traditional one-size-fits-all business models on their head.

Capitalizing on cloud is not just about moving to a cloud platform. It’s about optimizing utilization of services put into the cloud.

Cloud is here and now for every business and every industry. The dollars and cents don’t lie.

Chad Duncan

Managing Director, Cloud Enablement Consulting, North America

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