Can you save money with cloud computing?

The common perception is that cloud computing can save you a bundle, but a Forrester Research note indicates that the calculus is complicated. In fact, companies that don't manage resource consumption well could get hosed.

The common perception is that cloud computing can save you a bundle, but a Forrester Research note indicates that the calculus is complicated. In fact, companies that don't manage resource consumption well could get hosed.

Forrester analyst James Staten makes the following points:

  • Low costs per employee can add up. A $99 a month deal for an on-demand CRM system works if you have just five employees. For larger companies, the math gets tricky. Toss in modules and you could be looking at a hefty annual bill.
  • Infrastructure as a service can add up with usage---especially if you add other services like storage, load balancing, monitoring, content delivery and other items.
  • You still have operational costs. You still have to manage, secure, backup and recover cloud deployments.

So how do you make cloud computing pay off for you? When you manage your consumption tightly by turning off the meter. For instance, a batch report on a cloud platform can be completed in a few hours---once a month or week.

Staten notes:

Understanding the behavior of the applications and services you plan to deploy to the cloud is crucial to achieving success with cloud economics. Blindly buying cloud services and expecting substantial savings is a recipe for disaster. Understanding the business model behind the application is how you know whether cloud economics are simply a cost savings tool or a profit-maker for your company. While business buyers may provision certain cloud applications themselves, it still takes developers and IT administrators to activate infrastructure and platform cloud services. Much more importantly, it takes a CIO who can help bridge the understanding between IT and the business to make this a reality.

How many companies are tying applications to the business models that underpin them? Thought so.

In a nutshell, the cloud is a no-brainer for:

  • Short-term and cyclical applications.
  • Apps that fluctuate and have variable use cases.
  • Companies that can throttle resources.
  • Enterprises that can use the cloud to leverage new businesses and save on capital spending.

The hardest part is that companies need to monitor consumption and turn apps off with systems that sense inactivity. The rub: Many applications aren't built for this level of monitoring and neither are IT workers, who have grown up on ensuring capacity is always available.

In the end, companies need to profile apps, tools, developers and admins to gauge whether they can throttle performance enough to save money on cloud computing.