The Cloud Business Case: Are Expected Cost Savings Realistic?

According to Claranet Product Director Martin Saunders, cloud computing is not a cheaper alternative to on-premise server. However, cloud computing services do make up for that disadvantage. According to Saunders, cloud computing isn’t about purchasing hardware and infrastructure only. Usually, companies and individuals only compare the cost of on-premise server to the cost of cloud server. In the minds of these entities, an on-premise server will depreciate itself in 3 years while the cloud computing server will be treated as a continuous expenditure. The costs of electricity, labor, and staff training as well as personnel requirement are often left out of the picture.

According to Microsoft Chief Technology Officer for Cloud Services Ron Fraser, oftentimes the cloud is marketed as a cost-saving device and that the Chief Information Officer is tasked to map out a cloud computing strategy. However, cloud services providers are now talking to Chief Financial Officers and Chief Marketing Officers…


From the internal perspective, cloud computing is about portfolio application management, risk assessments, and probable cost savings. On the other hand, the external perspective deals about the cloud computing economics. According to Fraser, there is a basic and important move to equalize entry to the economies of scale which means that a small-scale business can have the same access to cloud computing as the global and diversified companies at the same price.