Investing in cloud services can lead to massive return

July 30, 2012

Companies switching from on-premise environments to cloud-based service can anticipate massive savings in their IT budgets, according to a study from the International Data Corporation (IDC). Savings from the switch, with the 11 organizations studied in various stages of the adoption process, amounted to 70 percent less spending than the cost of using the same resources would have in their old environments and possibly seeing a return on investment of up to 626 percent.

Much of the savings that companies saw with the switch came from reduced costs of deploying infrastructure. Some of the savings was also generated with reduction in services such cloud security and data management. Although the IDC study focused on organizations that had had adopted Amazon Web Services, the results show the potential for savings in the cloud, regardless of vendor.

Return on investment
Beyond just a declining budget, the companies in the study saw a number of benefits that increased the financial viability of the move. Part of that came as a result of increased productivity in the cloud environment. Productivity not only rose because of greater efficiency, but with more time to complete work, as organizations using cloud services experience 72 percent downtime.

Combining the savings and the cost benefits, some companies saw a return on their initial investment reaching toward the sky, with the value of such a switch only increasing with each passing year. For every $1 spent by a company on cloud service, the savings totaled $3.50 for those that had used the services for three years. Using it for five years amounted to $8.40 for every dollar, yielding a ROI over 600 percent.

Better IT, less savings
Although IDC and Amazon were bullish on the opportunities for savings, not every incident of adoption has yielded such impressive returns for their customers. Another study conducted by CSC found that savings experienced by companies making the switch were often minimal. In fact, around the world, concerns over data security in the cloud continued to impact decisions about both infrastructure and budget.

Despite a few more reservation in their viewpoints, those who participated in the CSC study were reaping major benefits from their switch to cloud services. In the United States, the positive impact of the cloud was almost unanimous, even as security concerns continued to linger. In fact, 90 percent of U.S.-based organizations noted an improvement in the state of their IT since adopting the cloud.

-McAfee Cloud Security