The Cost of IT and the Impact of the Cloud

Encora | December 01, 2021

One aspect of cloud adoption that many organizations are anticipating is ways to cut costs. While using the cloud allows organizations to cut costs in a variety of ways, one area with much potential for reduced costs is within an organization’s IT department. 

What is Cloud Cost Optimization?

Cloud cost optimization is a way of reducing your overall spending on the cloud by discovering poorly managed resources, removing wasteful practices, reserving capacity for higher discounts, and right sizing computer services to scale. Many organizations choose to implement cloud cost optimization to lower their IT costs. 

Cloud optimization is the “process of correctly selecting and assigning the right resources to a workload or application. When workload performance, compliance, and cost are correctly and continually balanced against the best-fit infrastructure in real-time, efficiency is achieved.”.

In short, a big piece of cloud cost optimization is making sure you’re using what you’re paying for, or, stop paying for what you aren’t using on the cloud. 

The Cost of IT

There’s no argument that IT costs are a hefty piece of any organization’s budget. And, as organizations look for ways to save money and lower budgets, many organization leaders wonder how to reduce IT costs. IT costs include:

  • Personnel

It may take a lot of people with specialized experience and training to fill out an organization’s IT staff, depending on its size. Many of these people likely have large salaries, in addition to the basic costs of hiring and maintaining employees. 

  • Hardware

There is a lot of expensive equipment, or hardware, that goes into running a modern business, and your IT team works with it all. This hardware includes all computers, servers, printers, computer hardware, wired or mobile telephones, on-site process control and automated systems, telecommunication assets, and other information technology-related equipment. 

  • Software

This includes any kind of software that the IT team needs to do its job. 

  • Outsourcing

Many organizations are outsourcing their engineering needs either offshore or nearshore. While this can be a monetary savings mechanism, it’s still likely a large piece of an organization’s IT budget. 

  • Disaster recovery

This is an important function of any IT team. The goal of a disaster recovery plan is to create technology recovery strategies to restore hardware, applications, and data in time to meet the needs of the business recovery. Ideally, the budget allocated to disaster recovery equals what a business would stand to lose in extended periods of downtime. 

  • Occupancy costs

While generally used to describe the costs of rent, etc, many organizations consider part of their IT costs occupancy costs. These include but aren’t limited to: rent, taxes, insurance, landscaping, computers, furniture, fixtures, and other equipment. 

IT and the Cloud

Now that many organizations have adopted the cloud or are considering that direction, there is hope that this change will lower their IT costs through IT cost optimizations. There are three main ways that using the cloud for your organization can cut IT costs.

  • Less necessary hardware

Servers and computers are expensive pieces of equipment, especially when you consider their maintenance and how often they need to be upgraded or replaced. By moving to the cloud, an organization can slash the budget line item for new or upgraded servers, and other types of expensive equipment.

  • Reduces time-consuming labor and maintenance

Cloud solutions and cloud optimization can take a business towards a large decrease in labor and maintenance needs. Since the hardware responsible for running the cloud is often now the responsibility of the vendor providing the cloud resources, this means there is far less hardware to be maintained on the organization’s side. 

  • Decreases occupancy costs

With a switch over to the cloud, organizations will save on the costs of physically housing servers, or more servers in the future. This means that cooling costs will be drastically lower, as well as rents for the space to house servers and other equipment.

Encora Offers Expert Help with the Cloud

Wherever you are on your journey with the cloud, Encora and their teams of expert engineers are ready to make your journey smooth and efficient. They are highly skilled at cloud implementation and architecture, cloud application development, cloud migration, cloud management, security and support and on-demand SaaS product engineering.  Reach out to Encora today.

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