Move to the Cloud?

Without considering increased efficiency, Does it make financial sense to place the .

Cloud solutions offer the same financial advantages to any small business as leasing does to any person who drives a car.  For a small business, determining if you should go to the Cloud lies in the answers to these three questions:

  1. How much has been spent on Information Technology over the last seven years?
  2. How long is the warranty on the new equipment being considered?
  3. Will the purchased equipment have any resale value in five years?


The first question is the hardest to answer for most small businesses.  Accounting records would show the cost of the equipment purchased, any maintenance paid to either internal staff or external professionals, any upgrades made or replacement parts that had to be purchased once the equipment fell outside the manufacturer’s warranty.  Less obvious costs are power expenses directly attributed to the equipment and the cost of the space occupied by the equipment.

The industry standard answer to the second question is typically one year parts and labor.  Most manufactures offer extended warranties but that additional expense should be calculated in the first question. 

The answer to the third question is one of the driving forces behind companies adopting Cloud solutions.  Software licenses tend to hold their value beyond five years, but they are not resalable.  Computer hardware, on the other hand, has an average life expectancy of five to seven years.  Unlike cars that can hold some portion of their original value long after they’ve been purchased, computers have little to no value after five years.  The secondary market for equipment is further diminished as hardware companies drive performance up and price down faster than any other industry. 

How does it Scale?

The biggest advantage of the Cloud lies in the economies of scale that it offers.  Most Cloud services come with “upgrades” that most companies couldn’t afford by themselves.  Redundant sources of power, replicated data backups, multiple layers of security, advanced climate control measuring air temperature as well as air particulates per million (dust), 24x7 IT staff, all result in significantly higher degrees of reliability than most companies can afford.
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