Cloud Computing's Overall Cost Advantages
Perhaps one of the most prominent reasons to consider Cloud Computing is the significant cost savings that can be realized. Interestingly, these savings come from some very obvious areas as well as some not so obvious areas.
Pay As You Go Eliminates Interest Expenses
Many companies considering a new project, implementation or even an entire equipment refresh will seek to finance or lease the hardware and software so as to eliminate the upfront cost. Doing so comes at a price, however, and that price is Interest. With the average interest rate currently at about 11% on a blended hardware/software/support lease, this can add up to real money. For those companies lucky enough to afford the capital outlay, the case shifts from interest expense to lost future value. This means that any potential interest income on that capital is lost forever. Cloud Computing alleviates both concerns because there is no upfront cash outlay, instead there are subscription based fees which are paid, interest free, on a regular basis.
It costs about $17,850 to finance $100,000 at 11% over a 36 month period!
Eliminate Existing Co-Location Expenses
Some of our clients have already taken the leap of installing their own equipment in a co-location center. Because the Cloud is, by definition, a co-located service offering, migrating those servers to the C3 cloud will eliminate any pre-existing co-location expenses. In some cases, these expenses can be as significant as $3000 per rack per month depending upon the power and bandwidth configuration.
Reduced Power And Cooling Expenses
Often overlooked, but not insignificant, is the reduction in power and cooling expenses. In 2009, the average cost per kilowatt-hour ranges from about $0.07 in Iowa to about $0.22 in Hawaii. Nationwide the average is about $0.12 per kilowatt-hour and in Florida, the current average is $0.11 per kilowatt-hour. When you start to eliminate servers and their 500w+ power supplies, the savings add up quickly. If you replace desktop PC's with low-draw, solid state thin or zero clients, even more savings can be had. Lastly, eliminating these heat generating devices will drive down cooling costs which further increases your savings.
Assuming the nationwide average of $0.12 per kWh, eliminating 8 servers with 500w power draw, will save $4204.80 in electrical charges PER YEAR!
Lower Total Cost of Ownership
By eliminating your own physical servers, you have also eliminated a key maintenance concern. No longer will you have to worry about replacing failed parts, or keeping the BIOS and system drivers current. This is all handled by your Cloud Provider. Additionally, at the end of the hardware's lifecycle, you no longer have to incur the expense associated with migrating your data from one server to another. This is a regular process that the Cloud provider performs in the background and without interruption to your services.
