In addition to flexibility, one of the greatest financial benefits of the cloud is moving technology costs from cap ex to op ex. Before the cloud, businesses had to make large capital purchases of hardware every time they needed more computing power and every time current systems failed.
Moving to Op Ex provides significant additional benefits for SMBs:
Payments on a capital good such as a server are one in a series until they are fully paid off, whether you continue to use the server or not. Cloud and IaaS hosting means you pay for only what you’re currently using.
With cap ex hardware investments come maintenance, repair, and upgrade costs, which can vary widely from month to month. In the cloud model, technology becomes a flat monthly expense, enabling you to set accurate budgets.
Reduced Hidden Costs
An on-site data center comes with cooling, power maintenance, networking, and IT support costs that are difficult to calculate or even to fully inventory. With a quality cloud option, your costs are contained in a transparent monthly fee. But beware: Not all cloud solutions are created equal. Be sure to review the “avoiding hidden costs” section of this guide to ensure your cloud solution truly delivers on this benefit.
Increasing Cash on Hand
Cash flow is king for most small businesses. Keeping more cash on hand allows more security and financial breathing room, as well as opportunity to invest in tools, resources, and the core competencies of the business.
No Cost of Capital
Anyone in business knows that capital doesn’t come cheap. If you’re borrowing the capital to purchase servers, you’re paying interest on top of the cost of the server. If you have the money to spend, there’s an opportunity cost to not investing it elsewhere.
The cloud can be difficult to navigate but there are a tremendous amount of benefits to it. With the cloud you can get a wider range of flexibility and you can also save money.
Is your business taking advantage of the financial benefits of the cloud?