How Cloud Can Save an Organization Big Bucks

One of cloud computing’s most attractive features is its ability to scale back costs and allow an organization to redirect its IT department’s efforts from one of maintenance to one of revenue-generating projects.

There have been several surveys recently revealing how cost is one of the primary factors in moving to a cloud environment. But how, exactly, are these savings realized? One expansive organization always on the lookout for cost savings is the U.S. federal government.

A recent article on FederalTimes.com showed how cloud can cut costs significantly by consolidating underused servers, paying for only the applications they actually use and by reducing software development time.

The government’s Cloud First strategy requires agencies to evaluate secure cloud computing options before making new investments in IT. The initiative found $20 billion in potential savings from cloud computing, which is 25 percent of the total IT budget. For agencies to harness these savings opportunities, they must leverage the cloud for IT efficiency.

There are several ways to tap into the full cost-savings opportunity of the cloud.

Cloud can help reduce costs by building a strong foundation through infrastructure as a service. By consolidating IT infrastructure through virtualization, agencies can pool underused resources and create efficient, resilient IT infrastructure. Cost savings are real, because when you consolidate underused servers into a common pool of resources, agencies are in a better position to extend the life and capabilities of existing infrastructure and make smarter future purchases.

Cloud also allows an organization to pay for the software applications they actually use and make them broadly available on multiple devices via software as a service. In this model, cloud providers install and operate application software in the cloud, and users access the software from the cloud clients. This eliminates the need to install and run the application on the user’s own computers, and significantly increases scalability. Price is also adjustable based on the number of users. This is valuable when a lot of users want to access the same application.

The cloud also makes software development easier, faster and more cost-effective, as most application development in the government happens outside of the IT department. As agile development methodologies have entered the mainstream, combining them with platform as a service technologies will result in another level of cost savings. Modern PaaS environments, where applications can be deployed without requiring users to purchase and maintain additional hardware and software, reside upon the IaaS infrastructure model. By combining these approaches, agencies can reduce software development times and costs.

A recent survey conducted by Rackspace found that 88 percent of cloud users pointed to cost savings and 56 percent of respondents agreed that cloud services have helped them boost profits. Additionally, 60 percent of respondents said cloud computing has reduced the need for their IT team to maintain infrastructure, giving them more time to focus on strategy and innovation. And 62 percent of the companies that have saved money are reinvesting those savings back into the business to increase headcount, boost wages and drive product innovation, the study found.

Patrick Burke is a writer and editor based in the greater New York area and occasionally blogs for Rackspace Hosting