There are an endless amount of reasons for an organization to switch to using cloud-based software. These reasons include: security, ease-of-use, ability for quick and easy set-up, the variety of cloud-based software, and more. On top of all of that, the reason that may resonate the most with those in charge of running an organization is the money saving ability that comes with utilization of cloud services. This ability to conserve capital comes from a myriad of characteristics that are inherent to cloud-based software.
Firstly, what is the cloud?
The cloud is what is utilized by many firms that consider themselves to be Software as a Service (SaaS) providers. The cloud, as defined by PCMag “means storing and accessing data and programs over the Internet instead of your computer’s hard drive. The cloud is just a metaphor for the Internet”. As organizations are moving to the cloud, or starting in the cloud, the cloud is becoming a buzzword that has started to spring up all over the technology industry.
- No high hardware investment costs
Before the cloud computing frenzy began, organizations had no option but to use a software that required housing hardware on-premise to support the software. The servers and other hardware associated with an on-premise system is very costly; both with up-front hardware costs, the space to house the servers, and the cost of maintaining the hardware. Not to mention, the pieces that go into the hardware must be bought in multiple quantities, in case something needs to be replaced.
The cloud does not require on-site hardware, but rather, the data is stored in massive servers located in multiple locations around the world. Meaning, the end user does not need to pay for the hardware, the maintenance of the hardware, the housing of the hardware, or the expansion of servers, if more are needed. This saves organizations utilizing cloud computing astonishing amounts of money year after year.
- Economies of Scale within Cloud Technology Companies
A cloud technology firm has a variety of clients, and the costs of maintaining the servers needed to provide their clients with their software is split among a large amount of organizations. Due to this splitting of costs, each organization pays a much smaller amount to house their data in servers with other organizations using the same software, than they would be if they housed their own servers.
- Less Human Capital
An on premise system requires a large amount of spending on hiring, training, and compensating employees to maintain and operate the heavy systems on a daily basis. These employees can be housed within your IT department or whichever department utilizes the software, such as HR using a payroll processing system. By switching to a cloud-based software, you no longer need to staff an IT department for the software; as the software provider maintains the system for you. The only people that you will need to staff with your new, cloud-based system will be the positions that are utilizing the software, like the few HR positions that operate a payroll processing software.
The technology industry is constantly changing, and switching to cloud computing is not only happening rapidly today, but is also the way of the future. With the abundance of benefits provided by a cloud-based software, making the transformation is imperative to any organization that would like to maintain modernity, while simplifying back office operations.