Moving to the cloud, saving costs and increasing efficiency

Introduction

In the ever-changing world of data analytics, companies are increasingly turning to the cloud to streamline their operations, improve scalability and most importantly, save costs. Migrating your IT infrastructure to the cloud offers a variety of benefits, ranging from improved performance to increased flexibility. However, the financial advantages of the cloud are also particularly noteworthy. This article is about the most important aspects of cost savings by migrating “traditional” on-premises IT infrastructures to the cloud. So called smart technologies such as automatic scalability or serverless systems are highlighted in some more detail.  

Costs of a “traditional” infrastructure compared to a Cloud infrastructure

Before migrating to the cloud, a company must first be aware of its demands, as these have a significant impact on the IT infrastructure you must built. As a rule of thumb, almost every company has great potential to optimize its processes or improve in handling and analyzing their data and use it more profitably. It is also essential to check whether a migration to the cloud complies with company-wide security and compliance rules. It is also possible that a company must meet government requirements, which could completely or partially prevent a migration to the cloud. Consulting with an expert for cloud infrastructures, solutions can be quickly and easily developed and uncover great potential.  

Upfront investments

“Traditional” IT infrastructure: Building and maintaining on-premises data centers requires significant upfront investments, including the cost of servers, network equipment, and physical facilities as well as keeping them secure. It is estimated that the investment for a traditional infrastructure can range from hundreds of thousands to millions of euros, depending on the size of the company and scope of the IT infrastructure.

Cloud-infrastructure: Cloud computing typically works on a so-called pay-as-you-go model, which eliminates the need for significant upfront investments as you only pay for what you actually use. Companies can start small and scale resources as needed. Various providers also offer online tools that show you an initial overview of what the costs of your own infrastructure could look like in the cloud. There are different packages and pricing models that offer significant discounts depending on the level of usage and time horizon. But even options in which you enjoy full flexibility and can order and cancel systems from one day to the other, oftentimes offer a cost reduction compared to “traditional” IT infrastructures.

Operating Costs

“Traditional” IT infrastructure: Maintaining and managing the on-premises infrastructure requires ongoing operating costs, including power, cooling and IT staff for system administration and maintenance. The exact operating costs for the IT infrastructure can oftentimes not be allocated exactly and can therefore place a considerable burden on the budget of a company.

Cloud infrastructure: Cloud provider take care of the operational aspects of the infrastructure, reducing the need for on-site staff and minimizing the costs of power, cooling, and maintenance. Depending on the pricing model chosen, a company only pays for the resources that were used, which leads to significant savings in operating costs. The cloud providers also offer integrated tools that ensure an exact listing of costs and even create an estimate for future costs. This provides companies with an excellent overview of the costs of their cloud infrastructure and enables them to use it in their budget calculations.

Scalability and optimal usage of resources

“Traditional” IT infrastructure: Scaling traditional infrastructure often requires purchasing additional hardware, or even expanding business premises, and perhaps even hiring new employees, which can lead to over-provisioning and wasted resources during times of low utilization. This means that companies pay for unused capacity during periods with little workload. On the other hand, they too have no easy way to adapt their computing power to the required workload when demand suddenly peaks.

Cloud infrastructure: Cloud platforms offer dynamic scalability, allowing companies to scale resources up, down or across as needed. This means, for example, that you have the option of switching additional instances on or off completely automatically and according to the current requirements of the workload. A second option is not to add additional instances but to replace the current computing instance instead with a more powerful instance. A combination of both variants is also conceivable. While fully automated scaling offers the most convenience, you can of course still influence relevant factors, such as limits on the maximum amount of money you want to spend each month or the maximum number of instances that can be switched on or off. This can also be controlled by determining the minimum computing power you want to have always guaranteed on demand at any time and so on. The different possibilities of implementations are as diverse as the requirements of the companies. This ensures optimal resource utilization for every workload and eliminates the need to invest in excess capacity. Most cloud providers also offer the option of entering different scenarios in a calculation tool and having an estimation of the costs displayed.

Another way to maximize resource utilization while keeping costs as low as possible is to use so-called “serverless systems”. The main focus is on simple and direct usability for the user, without any setup or maintenance effort. In this case, too, you only pay for the actual time that you used the systems' computing power. The longer automatically scaling and serverless systems are in use and are generating usage data, the more accurately a company can track and control the costs and utilization of its Cloud infrastructure.

Maintenance and updates

“Traditional” IT infrastructure: Usually companies have a dedicated and self-employed IT department, or use costly third-party services, to maintain and update their on-premises hardware and software. This generates additional costs and requires ongoing attention and effort.  

Cloud infrastructure: Depending on the pricing model and requirements of a company, the cloud provider takes care of the maintenance, updates, and security of the cloud, thus reducing the workload of the internal IT department and ensuring that systems are always up to date and decreasing the need to build up your own expertise in these topics. This not only saves operating costs, but also prevents the risk of the company losing important know-how if an IT employee leaves. The level of support provided by cloud providers is controlled by the systems used and the pricing model.

Summary

A direct comparison shows the cost advantages of a cloud infrastructure quite clearly. With lower upfront investments, reduced operating costs, improved scalability and more efficient use of resources, companies can achieve significant savings by migrating to the cloud and free up time and resources for their core business. Depending on what a company's current IT structure looks like, individual cloud providers state that, you can achieve long-term savings in the high double-digit percentage range or more by making a proper switch to a cloud infrastructure. Since technologies are constantly developing and helping companies to become more efficient in all business areas, the introduction of cloud solutions is not just a strategic step to ensure the competitiveness of a company, but usually also a financially wise decision.