TCO of cloud computing is lower

"This isn't just a geek thing," said MWEB's business GM, Andre Joubert. "There's enough evidence in cloudonomics - the economics of cloud computing - to prove that for most businesses, the total cost of ownership of cloud solutions is considerably lower than for traditional on-site computing."

Market research and analyst firm, Hurwitz and Associates estimates that the TCO for cloud-based business application solutions was 55% lower for 52 users; 50% lower or 100 users and 35% lower for 200 users than for the same solutions accommodated on the business' own premises.

In their white paper "The Compelling TCO Case for Cloud Computing in the SMB and Mid-Market Enterprises", the analysts note that IT Infrastructure costs - hardware, software and ongoing maintenance - take up about 11% of deploying on-premises business applications. These costs do not exist in the cloud.

In addition, IT analyst firm Gartner has estimated that IT maintenance accounts for about 80% of total IT expenditure - another cost that disappears in the cloud.

Even more compelling for many businesses is the fact that, with cloud computing, IT costs shift from capital expenditure to operating expenditure.

But ...

"What businesses need to keep in mind when opting to go the cloud route is that the benefits will only materialise if their cloud solutions work - and work well, all the time, every time," Joubert said.

"IT is the heart of every business. Few businesses can function effectively, if at all, if their IT systems fall over. With cloud, a business is literally handing over its 'heart' to a service provider.

"It's therefore absolutely essential that the choice of which provider to entrust with this responsibility is based on a lot more than price. Equally important is the fact that the gateway to technological freedom is good connectivity. For the best cloud experience, a fast, reliable connection is non-negotiable.

"Fortunately, we are in an era of choice, with almost no limitation on the amount of data you have access to or the speed of your connection. From a price/benefit perspective, the best option is almost always uncapped ADSL," Joubert concluded.