Does IT (in the cloud) really save costs?
Updated: Aug 22, 2019
By Tom Goodwin
Our next series of blogs focuses on IT in the cloud and how moving to a hosted model impacts the overall business expenses for medium and small businesses. For this first blog, we address the number one issue – costs.
Everyone is talking about moving their IT services and apps into hosted services. The amount of information and hype has reached a tipping point. Now even medium and small businesses are starting to listen to analysts who advise enterprises and organizations that they can cut costs if they move to hosted services.
With the large amount of data and opinions that are out there, this blog looks at how most organizations can reduce their IT expenditures by operating in a hosted services environment in three main ways
Saving money on hardware is the obvious first place to look for cost saving. Organizations with on-premise applications must invest in servers, routers, cabling and other hardware to host these company applications. All this equipment and the ancillary equipment to support the hardware represents a large capital investment. By generally accepted accounting practices, companies must depreciate the capital investment; which increase carrying costs and annual expenses that impact the bottom line. Additionally, hardware needs upgrading every few years. More costs are added to the carrying costs to buy upgrades or new hardware to handle new software and network requirements.
With hosted model, most of these costs are eliminated. A portion will be used to pay for hosted service where all hardware is maintained by the hosting company. Using the example of data storage, you can increase and decrease space as needed; paying only what you need with hosted services.
Software is another area where cost savings can easily be achieved. In traditional software purchases, licensing is used more often. Companies must pay for each user, with annual upgrades or maintenance costs. These ongoing expenses put companies in the dilemma of spending more money each year or risk operating software that gets stale and buggy, prone to malfunction and increasing downtime.
In a hosted environment, you pay a low monthly or annual fee per user or station, apps are continually updated by the experts at the host company. Any bugs are fixed by them. Time to install and upgrade well managed or almost eliminated.
Finally, most on premise application support expenses and IT resources are used for installing and maintaining hardware and software, in addition to the company network. This requires keeping a much larger staff than might be needed. This well exemplified by most companies’ business is not IT, but yet they spend up to 7% (source) of their budget on IT, and it has been growing for the last few years. Not only are companies having to maintain employees that are not directly connected to the core of the business but also the costs continue to rise.
Moving to the cloud reduces the amount of on-premise services required – less hardware and apps to maintain. Essentially less people and resources are needed. While some IT services are needed for network operations and security, overall spend on IT services is reduced.
HigherGround offers its software in a hosted configuration; Contact us if you would like to learn more about how you can save costs on your interaction capture and storage needs.
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About the Author - Tom Goodwin is HigherGround’s marketing and product management leader. He ran his own marketing/management consulting business for start-ups and SMBs rior to taking Vice President, Marketing. He has over 25 years of deep marketing and international experience from Alcatel-Lucent and Lucent Technologies. Click here for more information on the rest of the HigherGround team.
HigherGround, Inc. provides best-in-class, reliable data capture and interaction storage solutions that enable clients to easily retrieve critical information. Our interaction recording and incident reconstruction solutions transform data into actionable intelligence, allowing optimization of operations, enhanced performance, and cost reduction.