Determining How Much You Can Save
How many times has someone warned: "You can pay me now or you can pay me later?"
Cloud computing offers you the opportunity to turn that phrase around to "You can save money now AND you can save money later" and it's important to take a good hard look at both when determining how much you can save by making the transition.
OpEx and CapEx
Every day your business incurs OpEx, operating expenses necessary to operate the business. You pay rent on your office space, electrical power, telephone service, so even when you don't think you're spending you are.
Periodically you make capital expenditures, or CapEx, to make large purchases of equipment and other assets your business requires to operate. You generally amortize the cost of these over the useful life of what you purchase.
Cloud computing creates opportunities to significantly reduce many operating expenses, and to eliminate the need for many capital expenditures as well!
Immediate Savings From Operating Your Network
Each of these expenses may be somewhat difficult to isolate, but it's definitely worth the time to do so or to have a quality consultant (like, perhaps, CloudStrategies) come in to identify and quantify them for you:
Real Estate
How much of your physical plant do your network servers actually occupy as a percentage of your total space? Multiply your rent by that percentage to arrive at the cost of real estate.
Electrical Power
How much electrical power do your servers, backup drives, and other related peripherals actually consume? Multiply that by your cost per megawatt. Remember that this also contributes to your environmental sustainability. Green computing saves you green, too!
Cooling
The larger your server farm, the more air conditioning required to keep your servers at a proper operating temperature to avoid potential damage.
Personnel
There are several hidden costs to having personnel on your payroll to support your servers. Not only do you have to include their salary, benefits, overhead costs, and other related direct costs, you also have to estimate the cost of selecting, hiring, administering and managing them. Especially in companies that are not directly in the Information Technology business you may often incur additional recruiting costs to replace less-than-ideal hires.
Now add all of those costs and compare against what it would cost to house all of your server requirements at your cloud provider's data center. Don't be surprised to find significant savings in the cloud!
But you're not finished saving!
Every unit of computer-related hardware has an anticipated useful life, and constant innovation only serves to shorten that. Sometime within the next few years it will be time to replace all your servers. Take a look at the invoices for your last round of server acquisitions. Anticipating that innovation will increase costs add at least your last cost of acquisition to the savings you've already calculated.
Again, all of these costs are somewhat difficult to extract and compute, but with the right tools and processes CloudStrategies can help you to calculate a very close approximation, and then help you get started realizing those savings. Ask us. We'd be glad to help.