Moving to the cloud purely to save costs? Think again

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Organisations turning to the cloud with a sole intention of cost savings are the ones that are least happy with their cloud infrastructure and are the ones that are most likely to give up cloud adoption.

A recent Cloud Industry Forum research found that in the UK, large enterprises showed highest rates of adoption, at just over 80% followed by small and medium businesses. But public sector's cloud adoption lagged at around 68%.

The study also explored the drivers of cloud adoption and found that the flexibility of cloud as a delivery model was the primary reason for adoption in the private sector while operational cost savings were the main motive for the public sector.

It reminds me of an interesting conversation I had at Cloud World Forum a month ago with Photobox CIO Graham Hobson. Photobox was one of the early adopters of public cloud services - AWS. "When we started, cloud cost was just a fraction (20%) of our total IT spend. Today it is almost equal and I won't be surprised if our cloud costs overtake our on-premises spend soon," Hobson told me.

But that doesn't worry Hobson. In fact he says that public cloud has yielded several benefits in terms of scalability, IT responsiveness and efficiencies for Photobox. "If I was starting a company today, I would have adopted more cloud services than I did a few years ago," he said.

Cloud services operate on a pay-as-you-go model and although it may look attractively low cost at the beginning, if your IT requires constant high capacity and high performance, your cloud bill can soar.

Like I have argued before, cost-savings on the cloud comes over time as businesses get the hang of capacity management and scalability but the main aim of cloud use should be to grow the business and enable newer revenue-generating opportunities.

Just as Netflix or CERN or BP did.

The main advantage of cloud computing isn't always cost saving. If anything, cost saving is usually the byproduct of IT efficiencies found by running IT in cloud.

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This page contains a single entry by Archana Venkatraman published on July 7, 2014 4:23 PM.

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