Could Going All in on the Cloud Help You Save Money?

That's what a recent study suggests. A new Computer Economics report states that organizations that moved to software-as-a-service platforms ended up being more efficient when spending on IT-related expenses—and that led to more money for new projects.

The benefits of cloud computing aren’t limited to ditching the in-house server rack.

The reason I am confident that cloud saves money is that the results are consistent.

That’s according to a new report from the IT research firm Computer Economics that bucks conventional wisdom on information technology issues. Traditionally, the belief has been that, while hosting a server in-house has a high upfront cost, it saves more money than other methods in the long run because the cost is fixed and carried over time. (In comparison, cloud services, the thinking goes, cost less up front but more over time because fees are recurring.)

Instead, the study explains, cost savings with cloud computing come in other forms, including lower operational costs due to less need for IT staff, as well as reduced data center spending. All in all, the report finds, organizations that rely on cloud-computing-based software-as-a-service (SaaS) platforms end up saving 15 percent or more, on average, compared to the research firm’s benchmark data.

The results surprised Computer Economics President Frank Scavo.

“When we first started this research I expected the answer was going to be that companies that went to cloud computing spent about the same amount on IT as those on-premises but spend it in smarter or better ways,” he told Network World. Instead, he found that companies ended up spending on software more nimbly, with savings coming later as “on-premises infrastructure is significantly reduced or eliminated.”

While the study sample was small, covering just seven companies with between $50 million and $550 million in revenue, Scavo told Diginomica that the results were fairly consistent among the companies. “We hope to get more respondents in the coming months, but I do not believe the conclusions of the report will change,” he said. “The reason I am confident that cloud saves money is that the results are consistent.”

On top of the cost findings, the results of the Computer Economics study suggest that much of the money saved did not go toward upkeep but to new projects—a finding consistent with another recent study from IBM. That study, “Champions of Software as a Service: How SaaS Is Fueling Powerful Competitive Advantage,” found that two-thirds of SaaS pacesetters were seeing increased innovation, and 71 percent reported a shortened time to market for products and services.

The Computer Economics study, “The Economic and Strategic Benefits of Cloud Computing,” is available for purchase on the firm’s website.

(Getty Images News/Thinkstock)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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