Is cloud computing is economical?

What is cloud computing?

IT trends are changing rapidly, and forming layer after layer that touches every aspect of our lives. We are so depending on now these days on IT services, healthcare, BFSI and manufacturing etc, along with all kind of transactions. Cloud computing is the combination of software, data access, and storage services that do not require end-user knowledge of the physical location and configuration of the system that delivers the services. Cloud computing describes a new supplement, consumption, and delivery model for IT services based on Internet on virtualized environment. Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources for example networks, servers, storage, applications, and services that can be rapidly provisioned and released with minimal management effort or service provider interaction. Typical cloud computing providers deliver common business applications online that are accessed from another Web service or software like a Web browser, while the software and data are stored on servers.

Is cloud computing is economical?

IT delivery model cloud computing-can significantly reduce IT costs & complexities while improving workload optimization and service delivery. Cloud computing is massively scalable, provides a superior user experience, and is characterized by new, internet-driven economics.

“But if we flip the coin there are several other thoughts are behind that which is not clear yet” :

There are finding's about the ROI/cost of clouds are much higher than our costs for purchasing and supporting a more traditional client-server application. The primary differences are, of course, the on-going monthly fees to cloud vendors vs. the up-front implementation fees and hardware purchases for client server. Few findings say SaaS having higher costs than client-server setups. In that case emphasis shifts to functionality and IT solution, it depends on the nature and functionality of the application and the pricing structure. Vendors need to re-think their overhead structures. They must also set prices that deliver healthy, sustainable client ROI because long term profitability depends on customer retention and healthy subscription volume. In cloud computing, you are always on the latest version of software (no patches, no upgrades) and robust hardware that gets upgraded regularly. So every 3-5 years, a company would either continue to run on old hardware, or if it tried to upgrade software and hardware, incur more capital investment.

In terms of the cost comparisons, it's good to remember that when you host on internal gear, not only do you need to put up new hardware and replace it in 3+ years or so, but you also need hardware for test for example patches, integration or system testing, user acceptance and / or pre-production staging environments, not to mention database instances, clusters help. And resource time like DBA's, system admins or application specialists to refresh data from production so tests can be representative. Or you might not bother with that and experience the nice surprise of promoting an untested patch or unproven upgrade and quickly wish you had.

It takes a specific case to find the real answers, but a good portion of the ROI in SaaS is around ‘soft costs’. IT or management has no headaches about patches, upgrades, down servers, warranties, etc. It’s hard to gauge or justify these time savings in some cases unless you look at IT more strategically.