Nov 07, 2011

Are savings of 40-50% really possible when switching to cloud computing, as a new business study claims?

This morning I read about the results of a new business survey of 11 large business (Dell, Boeing and Citigroup, among others) that quantified the savings before and after switching from having a dedicated IT system to a cloud computing model, based on budgets for infrastructure, platform and software. The study reported savings of up to 40-50% when the change was to an internal private cloud. As an added benefit, assuming an adoption rate that shifts 70% of IT spending to cloud computing in 2020, a 50% reduction in greenhouse gasses was forecast, with annual savings of $12 billion in energy cost.

The research was conducted by the Carbon Disclosure Project and paid for by AT&T, and I wouldn't exactly call them disinterested parties.  Does actual experience supports the kind of numbers that the survey is claiming or are the survey and projections wildly optimistic?


Oh, I almost forgot, here is the link to the survey:


Wouldn't much of it depend on the particular company's initial expenses in the first place? Not all companies are run the same so you'd think the cost savings would vary depending on a variety of things. It's tough and probably unwise to generalize about all companies since so many are so very different.


One question that is raised in my mind is whether the large projected savings in money and energy resources carries over to business smaller than the ones surveyed. Of course, pretty much all business are smaller than Boeing, Citigroup, Deutsche Bank, et al. The companies surveyed also seem to be the type that require serious computing power, so I wonder if that skews the results as well. Even so, I don't think there is much doubt that a cloud model has cost benefits for smaller companies, and not needing to cool a data center would certainly result in some energy savings.

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