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How do cloud computing prices compare with on-premises operation costs?

SearchCloudProvider.com Editorial Staff

Does cloud computing really save customers money? How do cloud computing prices compare with the costs of running operations on-premises?

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Despite popular belief, switching on-premises operations to the cloud does not always result in cost savings. Inexperienced users tend to predict that cloud adoption will result in savings of about 25% -- and also predict a one-third reduction in overall costs.

Although there are many benefits of switching to cloud, it is false to assume that savings happen overnight. One main reason for this is that not all applications are cloud-suitable. It is true that switching to cloud can relieve customers of hardware, software and maintenance burdens, but a lot of businesses already have enough influence to secure pricing similar to typical cloud computing prices, making it increasingly difficult for providers to boast savings based on volume alone.

A more concrete benefit of cloud computing, on the other hand, is how it lets customers centralize support and maintenance teams. This allows customers to reap the benefits of provider-hired maintenance staff -- employees who are expertly qualified for those types of jobs. However, in major cities with skilled laborers in these departments, well-established businesses may already have found employees who offer quality work for the same price. This can make the promise of cloud cost savings in the form of labor pools quickly unravel.

An even more solid cost-savings plan that providers could promote to their customers is that with cloud computing, it is no longer necessary to spend money on floor space to store equipment or on cooling and ventilation tools -- aka all the things that go along with keeping a data center in-house. Cloud providers have the luxury of putting data centers in places where costs stay low -- a luxury that doesn't exist when a data center is located on-premises.

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This was first published in August 2013

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