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Benefits of Cloud Computing – Cost

19 March 2009 No Comment

In the first two articles of Cloud Computing, we talk about what Cloud Computing is and what Cloud Computing has to offer and so this time I will talk about the benefits of cloud computing.  So what are the benefits of cloud computing, well the first question should be who benefits from using Cloud Computing?  Even though the goal of Cloud Computing is offer services for individuals or rather a collective group of services for individuals, the majority of the benefits are for businesses and even schools who decide to use Cloud Computing Infrastructure.

So how are the benefits broken down?  Well they are broken down in the following categories:

  1. Cost
  2. Hardware
  3. Software
  4. Maintenance


When we talk cost, we are talking overall cost of IT infrastructure and if you notice the four categories they are all surrounded by the same thing, money and the reason for that is it take money to build an IT infrastructure for a business or school, of course the problem is it takes a lot of money, we are talking in the hundreds of millions overtime type of costs.  Now, with a Cloud Computing infrastructure, your going to be saving yourself millions if not cutting costs down by more then 50%-70%, depending on what your IT infrstructure is like.

The bulk of that money is actually coming from the hardware, software and maintenance of your IT infrastructure, while the rest of the money goes into paying for the services and the people who are maintaining the IT infrastructure.  Granted your still going to be paying money for those who maintain the Cloud Computing Infrastructure, but the overall costs will be a lot cheaper in the long run then what you are paying now.


In terms of overall cost in a business or school IT infrastructure, hardware costs would cover 45%, with software covering the other 45%, while the last 15% consists of people and services.  In recent years hardware has gotten cheaper, especially RAM, Procesors, Motherboards and graphics cards.  However, in order to maintain the IT infrastructure it has to be insanely fast, new and compatible with your computer systems, but with that speed and brand new smell your spending quite a lot of money, enough to buy a brand new computer say from Dell and even Apple, or if you want to push it, top of the line alienware computer.  OF course, the brunt of the hardware is server hardware because if your business or a school your maintaining massive amounts of data that can be access by millions of people all over the world.  So not only do you have to maintain the hardware you have to make sure it can handle the load of that massive data.

So where are benefits for Cloud Computing?  Well all those servers you store on site and spend millions to keep cool can be outsources to data farms and Cloud Computing Service providers.  So at most you will be paying for the bandwidth, space and some minor maintence fees to use those data farms or Cloud Computing service providers.  However, you cutting down a huge part of your budget for hardware by about 70-80% because of replacement parts and paying outside people to fix your servers and or computers rather quickly.  You could push it further by saying that with all that space in the building you have you could either move to smaller building or make bigger offices and stuff.  Either way, a large portion of your money will be gone once the removal of the high priced hardware is collecting dust somewhere else.


Now the other 45% of your overall costs is software and everyone knows it isn’t cheap especially software suites and of course buying bulk liscenses in order to install the software on hundreds if not thousands of computers.  In the last few years we have seen some great online or open source versions of the same software that you pay hundreds for;  we have Google Docs online service, got Open Office for your office documentation.  You have litterally hundreds of different software packages out there that can code in hundreds of different languages and of course you have the answer to free operating system in the form of linux.

To put it in perspective, say the business is a web design/graphic design business with hundreds of employees doing anything from basic websites to full blown movies and web applications.  Now a business would want the top of the line products in order to do those top of the line projects.  So your basic computer might have Adobe CS 4 Master Collection suite ($2500), Microsoft Office Ultimate ($700), McAfee Security Suite ( 3 Year Subscription $61.22 / License) and of course a $2000-$10,000 computer system in order to run that combination of software on top of being connected to a server with has massive amounts of data on it.  Now multiply that by 100 computers and you know that price tag is insane.  Oh you alost might want Vista Ultimate or Vista Business as well and so not only have you messed up your pants from the pure shock of the costs, you wonder how the hack a small medium business could survive which costs like that.

Granted, not all businesses are set up like that but the bulk of the costs are coming from software licenses you need in order for each computer to have the software needed to run the business.  Now he comes the fun part thanks to college of 2,100 students, with the use of a Cloud Computing infrastructure, they set up a virtual computers on their systems that run XP and Office 2003, with Vista and Office 2007.  Now if you know how a virtual enviroment works, they set it up that they installed Vista and Office on the server, once) and with the use of virtual software 50 computers were able to use Vista and Office 2007.  Then when they were done with Vista and Office, they turn they off and it was back to XP and Office 2003.

However, your going to like this since it covers hardware costs:

By consolidating and virtualizing servers, Marian IT staffers realized “we could do things that small to medium organizations typically don’t have the resources to do, including the VMotion or live migration of virtual servers and cloud computing,” Temaat said in an interview.  Temaat consolidated 15 servers — 10 servers in the data center, each running a single application, plus five scattered around the school — down to threeHP (NYSE: HPQ) ProLiant BL460c blade servers on a single 42-slot rack.

All three serve as hosts to virtual machines, and 16 servers are currently running in the data center, Temaat explained. Two shelves of disk drives for SAN operations are located close to the blades, leaving 32U of space to spare in the rack. Microsoft Exchange for e-mail runs on one virtual server, Microsoft (NSDQ: MSFT) Great Plains financials and FRX financial reporting in another, Three Rivers Systems’ CAMs student management in another, an SQL Server 2005 database in another, etc. Temaat can maximize resources available per application, or during slack times, consolidate servers down to two blades through VMotion, if he chooses. He has VMware’s virtual infrastructure

It is all starting to make sense now how big of an impact Cloud Computing has to offer, especially when comes to saving millions of dollars in hardware and software.


Although not as expensive as software and hardware, maintenance of the hardware, software and computers can get a bit expensive, especially when it comes time to update everything.  When it comes to the costs of maintenance if you move to cloud computing your pretty much wiping most of that out since most of your resources will be tied into the Cloud Computing Infrastructure and all you would really need to do is just update your computers and pay some cover chanrges for the Cloud Computing infrastructure.


Even though it sounds the best thing since slice bread, it is not as easy as that, especially if your building a Cloud Computing infrastructure in-house.  Heck it is not even quick to set up and it would take time especially if your coverting your servers, computers, software to connect together with that Cloud Computing infrastructure.  However,  once your Cloud Computing Infrastructure in place and everything is running smoothly you will be saving yourself thousands if not millions of dollars in 5, 10, 15, 20 years.

In my next article I cover some other benefits and then I will be discussing the cons of Cloud Computing

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