One of the current buzzwords in IT circles is ‘Cloud Computing’. From trade-shows to industry publications, IT decision makers and purchasers are being bombarded about how “cloud computing is going to transform your business”. This type of marketing talk actually does more harm than good; instead of providing specifics, it mystifies how cloud-based applications work. Management consultant, David Gardner, proposes that business executives are more interested in apps that help drive their business forward. Our businesses need to be more effective, not simply transformed.
To help clarify how cloud computing improves your business, we will review 3 key considerations about cloud-based applications.
1. The Cloud is not a standalone phenomenon.
Think of the Cloud as an evolution of computing power. Gartner, the IT research and advisory company, defines the Cloud as a style of computing where scalable and elastic IT-related capabilities are provided as a service to customers using Internet technologies. This has two implications.
First, if your company decides to virtualize applications, such as a contract management system or data storage server, your IT department needs to assess the implications of such a move. In mid-size and larger companies, IT systems and applications are interconnected. Therefore, as a department evaluates virtualizing an existing application or starts using a full SaaS application, the department heads need to make sure if and/or how it will affect other departments.
Second, you must be weary of “cloud washing” from vendors. A vendor may be re-branding an old application by just throwing the term “Cloud” somewhere in the name. Do your due diligence and take a good look “under the hood” to make sure this is not the case with something in which you choose to invest.
2. Less CAPEX, More OPEX
One of the most important ways in that cloud computing can help your company drive business forward is that it can help lower your IT infrastructure capital expenditures (CAPEX). In a world where we are constantly looking to reduce costs and allocate resources more efficiently, cloud computing allows you to do both simultaneously.
First, cloud computing can reduce lump-sum IT investments in expensive IT infrastructure. It transfers the responsibility of the hardware to the vendor, so all you have to do is pay a third party in the form of operating expense (OPEX) to create and manage that infrastructure for you. Second, when your IT staff spends less time on maintenance tasks, they can focus on more strategic tasks. As a result, they become more productive.
3. Better Cost Allocation
Moving to the Cloud means that you will be able to track costs more effectively. Instead of spreading your overhead over every single department, your accounting department may be able to allocate costs based on departmental use. This flexible, pay-as-you go nature of cloud-based applications allows better cost allocation under most circumstances.
This ties in with the fact that in large corporations, most applications are used by more than one department. The problem with in-house solutions has always been efficiently determining which departments use which applications and how much they are using them. With clear usage meters, cloud computing allows for better cost tracking; for example, the use of an enterprise contract management system could be tracked through the number of logins and length of sessions from user accounts.
Takeaway
The Cloud is definitely more than just a buzzword. It can truly help your business to become more efficient. More specifically, it can help you to minimize CAPEX, maximize IT investment through dynamic OPEX and allocate better usage costs of IT services.
