Startling Cloud Cost Data
February 10, 2010
The story “Cloud Shrinks IT Costs by 90%” contains the type of data I like to use in my public lectures. First, it is a blockbuster number—taking $1.00 in costs and chopping them down to one thin dime. Second, the statistical foundation of the number is rarely challenged as long as I can point to an “authoritative source” like ComputerWeekly.com.
For me, the key point in the write up was:
Companies that are using cloud computing are paying as little as one-tenth for the same processing power as they would for equivalent in-house facilities. This emerged from a floor debate at the Powered by Cloud conference in London this week. Asked what return on investment they had achieved from their cloud experiments, representatives from mobile network operator Vodafone and TV broadcaster Channel 4 said the cost of their cloud-based processing was a tenth of traditional in-house computing. A speaker for Verizon, which offers cloud computing, said its customers were saving between 25% and 75% of the traditional costs.
Let’s assume that this type of savings is accurate. What’s the future of on premises software? Well, grim, I suppose. What happens to traditional enterprise software companies? Well, grim, I suppose. What happens to the rationalized IT executives who no longer have a job? Well, grim, I suppose. What about on premises search and content processing systems? Well, grim, I suppose.
The good news is a return to the type of computing environment that characterized some of my early experiences: industry dislocation, limited choice, high costs, and reduced control. Do you see something different?
Stephen E Arnold, February 10-, 2010
No one paid me to write this article. I will alert the facilities manager of the new executive office building, where cost controls are paramount.
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