Cloud Software Has the Best ROI, and Here’s Why

May 17, 2016
Quincy Johnson

Author

Quincy Johnson

Digital Marketing Specialist

How can you get the best possible return on your software investment? The answer may lie in abandoning traditional on-premise solutions and migrating your software to the cloud.

There are many ways in which your business can benefit from adopting a cloud solution rather than a traditional on-premise one. You can expect faster implementations. You’ll always have the most up-to-date software. And, of course, there are the costs to consider.

When you’re looking to implement any new IT solution, you need to ensure it offers good value for money. It has to be fit for purpose – giving staff the tools they need to do their daily tasks. And it has to enable you to achieve your key business objectives. Put simply, you need to guarantee a good return for your organization.

Forget traditional costs by using cloud software

The main way in which cloud software, or software-as-a-service (SaaS), helps you increase your ROI is that it effectively removes your main up-front investment. With a traditional on-premise solution, you need to pay out capital expenditure (Capex), investing in hardware and software which the business then owns.

Installing a traditional on-premise solution results in a number of costs, including:

  • Infrastructure – servers, network, firewall
  • Software – operating system, application software, client access licenses (CALs)
  • Operational – engineering for the deployment, resources to keep applications live, resources for updates and maintenance
  • Environmental – rack space, power consumption, cooling system
  • Base infrastructure – management and monitoring, back-up, reporting

With this initial outlay, and several ongoing costs, you’re already in a position of chasing that return. The money is effectively spent, and now the business needs to justify it.

A new way to pay

With a cloud solution, you eliminate much of that initial spend, switching your costs to operating expenditure (Opex). Some of your IT costs will always remain the same, but when you invest in a cloud solution, they look very different, including:

  • Service cost per month
  • Engineering for the deployment
  • Infrastructure cost for connectivity and security
  • Base-infrastructure cost for monitoring and reporting

Rather than buying your IT solution up front, you’re renting your service for an agreed monthly fee. You access your software via the internet, and only pay for what you need – rather than investing heavily in a solution that will date over time and require regular maintenance.

With an on-premise solution, you can argue that after the initial outlay, the infrastructure is yours. Once it’s paid for – and more importantly, paid for itself – your expense stops, whereas with SaaS you’re paying a regular monthly charge as long as you have it. But don’t forget the software you own needs costly updates and maintenance – software-as-a-service doesn’t.

Yes, your IT team can do all the monitoring and maintenance themselves – but what other projects could they be using that time for? What happens if your data center goes down? Do you have the SLAs in place to avoid costly downtime? And as your infrastructure inevitably grows (when you bring on more staff), can you realistically afford to maintain it, or will you need to grow your IT team and pay out even more?

On a month-by-month basis, Cloud software solutions are the clear winner, delivering a smaller cost for the business. So, we think they’re the smarter IT investment.

How much could you save by moving to the cloud? Contact a SoftwareONE CSP expert and find out.

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