5 Advantages Of A Cloud Utility Architecture For Younger, Fast-Growing Companies

by Yehuda Cagen 31. January 2011 04:12

As seen in Enterprise Features.


Until recently, many of today’s business executives saw IT as a financial sinkhole rather than as a profit center. As a result, many have opted with what, at first glance, seemed like the least expensive option. Today, many business leaders recognize that IT has become more integrated into the business process.

There are those, however, who believe that you can better control your own destiny by using in-house IT equipment. One argument contends that this option does not put the client company at the mercy of third-party vendors or tied into their long-term binding contracts.

Indeed, if you’re looking to outsource your IT function to cloud computing provider, you should always be careful about signing a long-term contract. Computer technology evolves so quickly that it’s hard to know whether your vendor has the resources to keep pace.

Security is also a great concern. It’s important for small businesses to choose their vendors wisely. The “cloud” provider should have proven skill levels, such as certifications or client references. Be certain that their services meet your standards by asking the provider to offer a trial period.

A proven vendor should have no problem offering a trial of their service or software. Be wary of those who do not. Generally, it’s important for the clients to compare the performance with their own pre-established objectives. Failure to meet the established service levels must result in a predefined penalty.

Certainly owning and managing your own equipment seems fairly innocuous for a small business. However, over time, key components - such as CPU, disk, RAM, and, to a certain extent, the network – begin to bottleneck, resulting in latency or crashing of your system. These problems grow exponentially in organization with satellite locations and remote users. All too often the typical in-house answer for these problems is to throw more money at it. Buy another server. Add more redundancy. Hire another IT support person. It can become a vicious, never-ending cycle.

Here are a few additional reasons why a cloud/utility architecture would be better suited to a younger, fast-growing company.

Better IT Budget Forecasting: IT has quietly assumed a larger portion of the corporate budget and has consequently become more integrated with the overall financial plan. Most pundits agree that the purchase cost of equipment represents only a fraction of the total IT budget. The volatile nature of IT, such as unexpected crashes, security threats and upgrades only increases budget uncertainty. Since in most cases, the cloud provider assumes virtually all capital IT and personnel costs, executives need only to forecast for a consistent per user monthly fee.

Rather than overinvest to meet demand, the organization can deploy IT resources on-demand – as the market dictates. This simplifies the task of budgeting for potential growth, particularly with complex expansion or merging projects when headcount is increased or reduced. The organization pays only for the resources it uses, and as head-count fluctuates, costs are adjusted accordingly.


Adapt More Quickly to Evolving Market Conditions: The conventional process of purchasing, installing, managing, protecting and supporting an onsite IT system has become a vicious cycle and runs contrary to management’s role to reduce recurrent expenditures. Organizations can leverage the cloud provider’s enterprise-level IT resources and deploy them as-needed. This helps break the cycle of recurrent IT expenditures and positions the organization to adapt to evolving market conditions.


Manage Risk Better: Simply put, the more IT investments, the greater the risk.  However, most organizations must over-invest in IT to meet growing demand, thus increasing expenditures and the involved risk of IT maintenance and management. Cloud providers reduce the organization’s dependence on onsite systems by assuming the costs and risks of the entire IT lifecycle: hardware, backups, security and support.  Liability no longer lies in the hands of the management to purchase, manage and upgrade equipment. Executives can allow the organization to pursue growth opportunities without incurring the risk of significant capital outlays.


Manage Rising Energy Costs: Powering, cooling, and operating PCs and servers make for huge electric bills. Since humid conditions can be detrimental to a computer system, office temperatures must be set at cool levels to keep a server running. Gartner Research estimates that the electrical bill alone per server can cost $3,700 over four years.  Going to the cloud helps companies reduce their electric bill by centralizing equipment and moving in-house IT to a safely monitored, disaster-proof data center. By centralizing computer equipment into a remote location, companies can also reduce the office utility bill.


Improve Employee Morale in Recessionary Times: IT problems such as computer downtime to due server crashes or security issues only add to an already elevated stress level. Downtime lessens employee productivity and company productivity. Cloud solutions allow employees to work from home using the same familiar desktop interface, drastically reducing commute time and costs and improving employee morale.  Remote users have ubiquitous access to the provider’s support team. Most providers have executive-focused management consoles that enable management to monitor employee activity remotely.


Even today’s multi-national enterprises have embraced cloud computing as more cost-effective, agile and efficient alternative to onsite systems. The only exception to this rule would be the use of onsite systems as a testing environment for IT projects.

We hope you have found this information helpful. If you would like to learn more about this subject, please feel free to contact us:

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