Can the cloud save your business money? It can, and we’ll now highlight some of the most compelling financial advantages of cloud computing.

Saving on CapEx

A public cloud service provider like Amazon Web Services (AWS) or Microsoft Azure rents you access to their infrastructure. It’s an operating expense (OpEx) that shows up on your income statement. Traditional, on-premises infrastructure is a capital expense (CapEx). The cloud saves you cash by not requiring you to buy a lot of hardware and software licenses upfront. Instead, you rent it. In general, this results in savings, at least in month-to-month cash-flow terms. You still need software licenses in the cloud, but the payment process is often different from what’s required for buying on-premises software.

Saving on the data center

The cloud reduces your data center footprint. If you’re involved in financing data center construction and operations, you’ll understand just how costly it can be to build and run such a facility. The construction costs are astronomical. Then, you have the ongoing outlays for electricity and maintenance of air conditioners, physical security, insurance, personnel, and so forth that can really add up. The cloud also rescues you from the expense of renting data center racks from co-location providers.

Saving on infrastructure administrators

When you migrate to the cloud, you do not need as many people administering your infrastructure. That said, requiring fewer full-time employees (FTEs) on infrastructure admin duties may not automatically represent savings. You may want to redeploy those people to other work. And, you will still need people to administer your cloud instances. However, the cloud offers you an opportunity to cut the admin budget if you so choose.

Saving through flexibility

Your CFO will be happy when you tell her that you can now cut IT spending when demand for IT resources drops. In the cloud, you can scale up your infrastructure at a busy time like the holiday shopping season and then scale it back down when things get slow. This is a great advantage, in cash-flow terms. It also gets you out of the practice of over-buying equipment in anticipation of a busy season and then letting it sit there, under-utilized for the rest of the year.

Saving on disaster recovery

The cloud makes possible a variety of economical disaster recovery programs that would have been prohibitive in the on-premises era. For instance, with the cloud, it’s relatively cheap to set up a nearly real-time mirror site in another geographic location. If there is a disaster like a hurricane or a cyberattack, you can instantly failover to the backup instance. This capability may not represent direct savings, but it definitely offers potential savings. The costs of recovering from a disaster without a mirror site are far greater than what’s possible with one.

Saving on storage

The cloud helps you save on storage. This is mostly possible due to the practice of “storage tiering.” With the cloud, you can put old data and files into the lowest cost, slowest performing storage. Current, important data can be assigned to more expensive, high-speed storage, such as all-flash drives—either in the cloud or on-premise. You get away from the capital-intensive practice of arranging on-premise storage for all of your data.

Additional Cloud Resources

5 Benefits of Migrating to the Cloud

10 Cloud Computing Myths

Moving to the Cloud: Top Questions to Ask