There’s little doubt as to whether cloud technology is the emerging technology in today’s business environment. With mobility in mind, most cloud technologies allow company’s to access their data where ever internet is available.
There are minor shifts to cloud technology that we immediately recommend because of simplicity and cost efficiency. For example, Microsoft Office 365 will completely shift the company’s email exchange server and SharePoint server to the cloud for an amazingly low cost per employee fee. For one low cost per employee, per month, one can access to the most up-to-date version of Office on their computer, Lync (chat, presence management, video conferencing, desktop sharing, etc.,), hosted email, Office Web Apps, and hosted SharePoint. We have completely shifted our internal email to Office 365 and recommend it to the majority of our clients. (If you would like more information on Office 365, call or contact us.) Although Office 365 could save some companies thousands of dollars from infrastructure costs, does it mean that cloud technology is an end-all-be-all solution?
Last month, Rob Livingstone published a great article on CFO.com titled Choosing a Cloud Application: A Hornets’ Nest of Complexity. In his article, he gives a great example of a large company that assessed their on-premise server applications to be more cost effective than cloud. He writes:
Based on the business’s current transaction volumes, the initial cost analysis showed that at the end of 24 months, the total SaaS costs would be between 135% and 280% higher than the on-premise equivalents. If the analysis were extended five years (the projected life expectancy of the application), the difference widened to between 280% and 350%. Those costs would be significantly higher than the expense of hiring additional IT staff to support the on-premise applications. Factoring in upside transaction growth projections (based on the organization’s strategic plan) further increased the SaaS cost over the on-premise alternatives by an even wider margin.
In this example, the cloud technologies researched added additional transaction costs to their plan which increased costs dramatically. (Later, he adds 5 lessons learned that I recommend you read.)
Cloud technology is a phenomenal technology but one that must be analyzed and scrutinized to verify that the move is the most advantageous for your company. Although cloud is the buzz word, it appears that most are adopting a hybrid infrastructure where both cloud and on-premise technologies will make up the business IT infrastructure. As always, if you’re planning to make any major shifts in technology, perform cost analysis and involve an IT consultant in your decision making.