Is this cloud a rainmaker?

3 Mar 2009

By Ken McElrath

The economic crisis has many schools scrambling to find ways to cut costs. Crisis presents opportunities for change, and we can only hope those changes will be positive for students. One item under consideration is technology, and for many, cloud computing is the next big thing on the horizon for cutting costs and creating transformative change in schools. But is this cloud a rainmaker or just another empty promise?

Depending on which pundits or vendors you read, you can find claims of cost savings anywhere from 10% to 90% for organizations who switch to the cloud. That's quite a broad range. But before discounting such claims as the result of overzealous cloud converts, it is helpful to know that the claims may be completely valid, depending on the particular application.

For instance, an education organization that chooses to switch to Google to deliver email services can experience seemingly unbelievable savings. Google offers free Gmail services to education institutions, using your own URL, without ads. To build a formula for cost savings, first add up the costs of purchased or leased Exchange servers, CPU licenses to handle peak usage, server licenses, upgrade costs, maintenance and repair contracts, internal management and support. Now compare the total of those costs to free. Perhaps 90% savings is not such an inflated number after all.

Still, lest we become zealots ourselves, it is prudent to exercise caution. A very well-thought-through comparison is made by George Reese on the O'Reilly web site. He compares three different models for growing IT infrastructure:

  • Built in house with owned or leased equipment
  • Outsource the infrastructure to a managed services provider
  • Cloud computing
  • Through careful comparison, Reese demonstrates that cloud computing can easily save 29% versus the in-house model, and 18% versus the managed services model. Though conservative, these are significant savings nonetheless.

    There are additional benefits to cloud computing as well, including:

  • Zero up-front costs
  • Not having to manage/spend for peak usage (the cloud handles that)
  • Almost infinite scalability with nominal or no cost increases
  • Automated backups and in some cases, restore functions
  • On platforms like Force.com, the ability to customize without breaking anything
  • Transparent upgrades
  • No formula has been created (to my knowledge) that can add up the savings from all of these benefits. Still, it shouldn't be difficult for even the most cautious executive to see that the cloud represents more than a passing fad. Perhaps it is a rainmaker after all.

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