You’ve likely heard the saying “out with the old, in with the new,” and for your IT infrastructure, this couldn’t be more true. Maintaining expensive on-premise servers, storage, and other hardware is a serious drain on your budget.
Between the initial hardware costs, maintenance, support contracts, and power and cooling needs, it all adds up quickly. Switching to cloud solutions virtually eliminates these expenses. As a cloud customer, you pay only for the computing resources you consume on a flexible, pay-as-you-go basis. There are no large upfront costs or wasted resources.
Let’s scroll down and learn about 7 ways cloud service providers slash your IT costs.
1. Save Big on Software and Licensing Fees
In addition to hardware, cloud service providers also take the burden of software licensing off your hands. With an on-premise model, you’d need to purchase and maintain expensive licenses for all the applications and systems your business requires.
This includes operating systems, databases, development tools, and more. The licensing fees alone can run into the tens of thousands each year. As a cloud customer, you gain instant access to a huge catalog of ready-to-use software without licensing costs.
2. Say Goodbye to Over Provisioning and Underutilization Waste
With traditional IT, it’s nearly impossible to optimize resource utilization. To avoid performance issues, you often end up overprovisioning hardware and infrastructure capacity well beyond your actual needs. This leads to massive amounts of resources sitting idle and going to waste.
Some of the key issues that result from overprovisioning and underutilization include:
- Servers are rarely running at full CPU capacity, leaving large amounts of processing power unused. Studies show the average server utilization is often under 30%.
- Network bandwidth is oversubscribed to avoid congestion, even during non-peak periods. Excess network capacity goes underutilized much of the time.
- Redundant infrastructure is deployed across all tiers—servers, storage, and networking—to ensure high availability. However, the backup capacity is rarely used and mostly sits idle.
In contrast, cloud computing eliminates these inefficiencies through its elastic, pay-per-use model and automated scaling capabilities. Compute, storage and other resources can be dynamically provisioned on demand to precisely match current utilization.
Some key advantages of the cloud model include:
Server instances, databases, and other services are only run when actively in use. No wasted CPU cycles processing idle workloads.
- Storage capacity is consumed on an as-needed basis and scaled up/down automatically based on real-time usage.
- High availability is built-in through replication across multiple cloud regions, eliminating stranded backup capacity costs.
- Resources seamlessly scale in granular increments, like 1 CPU core or 1 GB of RAM, as workloads ebb and flow throughout the day.
This on-demand, pay-as-you-go approach maximizes resource efficiency and utilization rates while eliminating the overprovisioning waste of traditional IT infrastructure.
3. No Longer Need Costly in-House Expertise
Maintaining complex on-premise infrastructure demands a full IT team with a wide range of skills—system administration, networking, security, storage management and more. This level of in-house expertise is costly to hire and retain.
With a cloud service provider, you offload responsibility for operations, management, updates and around-the-clock support to their technical staff, saving massive amounts on in-house IT headcount. Provider teams stay on the cutting edge of technologies too through continuous learning and certification programs.
You gain access to a broader set of skills than most companies can afford to hire directly. This “operational expense” savings lets you reallocate budgets to strategic business goals versus system maintenance.
4. Stop Wasting Money on Redundant Infrastructure
Traditional data centers require costly redundancy across all tiers: redundant servers, storage arrays, network paths, power supplies and more. This ensures high availability but results in a lot of wasted capacity sitting idle as backup.
Cloud computing provides built-in redundancy at a fraction of the cost through its shared, multi-tenant infrastructure model. Resources are pooled across many customers simultaneously, so providers can achieve efficiencies that any single organization cannot match on their own.
This shared infrastructure approach offers the same levels of high availability and disaster recovery capabilities as traditional systems—without the excessive redundant capacity costs.
5. Scale Resources On Demand Without CapEx Burden
Scaling capacity up or down in physical data centers requires large capital expenditures (CapEx) well in advance of anticipated needs. This results in overprovisioning to avoid running out of capacity later.
The cloud service turns this financial model upside down through its pay-as-you-go OpEx approach. You have instant access to vast computing power and can dynamically scale it up or down within minutes based on real usage patterns—without any long-term capacity planning or CapEx commitments.
Only pay for what you consume when you consume it. This consumption-based model lets you avoid massive upfront costs and gain extreme scalability and flexibility at a fraction of traditional infrastructure costs.
6. Stop Wasting Money on Stranded Capacity
With physical servers and data centers, unused capacity is “stranded” and provides zero business value. You’re still paying fixed costs like depreciation, power, cooling and support, even though the resources produce nothing.
On cloud platforms, stranded capacity is virtually eliminated through their elastic, utility-based pricing model. There’s no fixed cost attached to idle resources, so you never waste money on infrastructure that’s not contributing. This helps maximize utilization rates and minimize expenses associated with stranded capacity.
7. Leverage Global Infrastructure for Optimal Pricing
Cloud service providers achieve tremendous economies of scale by building and interconnecting data centers across multiple low-cost regions worldwide. They pass these geographic cost savings directly to customers.
For example, you can run applications in lower-priced regions to match peak usage patterns and take advantage of optimal pricing. Workloads automatically fail over between regions as needed for high availability.
This global infrastructure approach provides pricing advantages that no single organization could achieve alone. By leveraging a provider’s worldwide footprint, you gain access to the lowest total cost of ownership versus maintaining your own localized infrastructure.
Final Words
As this blog outlined, switching from on-premise systems to cloud platforms provides at least 8 clear ways for organizations to dramatically slash IT costs. From eliminating hardware expenses to optimizing resource utilization, cloud adoption addresses many of the financial inefficiencies that traditionally plague on-premise infrastructure. Best of all, you gain all the scalability, flexibility and operational benefits of the cloud while saving potentially millions in the process.