Migrating to the cloud will reduce both capital and operation expenses

January 18, 2019 | Rob LaPointe

Can migrating to the cloud lower capital and operating expenses? The quick answer is yes it can. There are many reasons why the cloud can be more cost-effective than traditional options such as lower setup and maintenance fees, less IT staff, better employee productivity, and more.

Cloud computing is for every size business. In fact, more small businesses use it than large ones. Over half of the businesses using the cloud say they switched to reduce their IT costs. In the end, it did reduce it by over 30%. Not only did it provide them with the tools they needed to run their business but it saved them money. What’s great is there are multiple cloud options for businesses to choose from.

When it is time for you to look at either continuing with the infrastructure you have or switch to the cloud consider the costs. Keeping your current system comes with both capital expenses and operating expenses. Let’s review these and compare it with what comes with the cloud.

Capital Expenses

Capital expenditures are what you spend on fixed assets which can include equipment and maintenance. It’s the actual physical items you have for your organization. They depreciate pretty fast as well. Then there are all the maintenance costs if problems occur.

Operating Expenses

This is simply the general costs of running your business. It’s more short term items like office supplies that you constantly use up. All the pieces like domain and hosting of your website are part of this as well.

Many companies try their best to reduce both Capital and Operational expenses without changing the companies production quality. This is something that is pretty difficult if you keep using the same infrastructure. The decision of what to purchase and/or get rid of isn’t as black and white as it used to be. The capabilities of the cloud have truly made a huge difference in operational and capital expenses.


The cost associated with creating your own infrastructure is massive. Physical servers take up a lot of space and cost quite a bit to maintain. Setting them up has a pretty hefty price tag as well and requires quite a bit of time. There is a lot required of physical servers which include very strict security measures and various certificates.

The key here is that purchasing any hardware and even software is a thing of the past. The SaaS model can be a better way to go but it can be hard to determine what the real cost of this is.

The Advantages There are many advantages to migrating to the cloud:

1. Everything is bundled together. You’ve got everything in one place. You don’t need to have multiple items from different vendors. It can all be done with one company.

2. The up-front investment is much lower or even non-existent in comparison to setting up your own equipment.

3. Migrating to the cloud is the responsibility of the vendor. Take Amazon Web Services (AWS), for example, they take care of everything for a low cost and it’s a smooth process.

4. Support is completely done by the vendor as well. You don’t need to hire a whole IT team to constantly monitor and make changes.

5. Buying new equipment isn’t necessary for the cloud. Equipment only lasts so long and when its time to replace it, that cost would be yours unless you are on the cloud.

6. The cost is, of course, is the biggest factor. With your own equipment will end up paying more in many different areas. It’s not just about the usage but also the people, the setup, and even the actual employee productivity.

The Cost

You don’t pay one price each month but rather you pay depending on your needs and your cost fluctuates based on that. If you are truly looking to reduce your IT costs then this is how it can be done:

1. Flexibility

You can access your data from anywhere, at any time, on any device. Multiple people can work on the same project but be in completely different places. Everything is tracked in the cloud and can be reviewed at any time later. This type of flexibility makes the process of completing projects much faster. Employees end up being more efficient and productive because completing a task becomes much easier. An increase in efficiency and productivity means lower costs.

2. Ease of Setup and Management

The price comparison of owning your own equipment versus just setting it up on the cloud is no contest. The cloud will save you setup and maintenance costs. The provider already has this for you. Maintenance on the cloud can be either free of charge or a minimal cost. No setup fees or IT teams save a lot.

3. Storage Usage

With traditional systems you try to gauge what you might use, sometimes you need more and sometimes you need less. Either way, you could be overpaying or need to go through the whole process of adding more which takes time and more money. The cloud scales allowing you to simply pay for what you actually use. There is no need to call anyone, the system does everything automatically. You can use as much or as little as you want.

4. Security

Keeping all your data secure is crucial. Security regulations, paying for a team to keep everything secure, and always having to make updates can be costly. The cloud vendors do this themselves. They keep their systems secure and always update when needed. Data security is one of the most important factors to take into consideration and its why many businesses are migrating to the cloud. In the end, it reduces their capital expenditure.

With all that in mind we are seeing a bit of a decline in the pricing as well, and like anything else, it will continue to do so. The reason is that people are realizing how amazing the cloud is and cost-effective. Since demand is rising we should definitely see even more savings as the years go on.

How to Switch

If you want to get set up on the cloud or start migrating to the cloud, you want to use a team that is skilled. SDI specializes in building and migrating websites and systems to the cloud. You have quite a few cloud options out there so a team of experts will be able to analyze your businesses needs and match a cloud company to you. You can contact Rob LaPointe at 408.805.0495 or email him at rob@sdi.la for more details.

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