1. The Strategic Case for Cloud Computing
By Beat Naef, December 19, 2016.
One way to build a case for the migration to cloud computing is comparing the on-site data
center infrastructure model with the cloud computing service resource model. Both models
provide hugely important, but ultimately auxiliary, compute, storage, database, networking and
communication services for the business organization.
Hence businesses want the functionality and operational efficiencies afforded by those
resources but not necessarily the operational and investment infrastructure commitments
traditionally demanded by those services.
The Financials and Economics
On-site data centers are investment and capital expenditure intensive and contribute to your
balance sheet. On-site data center operation tends to be fixed cost based and thus difficult to
trim and slim the income statement. You need to have staff on board, often 24/7, to service,
maintain and manage your IT infrastructure.
Moreover, on-site data center economies of scale rarely materialize because operational
complexity tends to increase as hardware and infrastructure resources are being added and
costs keep increasing linearly if not exponentially.
The cloud computing model centers around service consumption, typically you pay as you go.
This has a direct impact on your balance sheet as well as your income statement. Less
investments and capital expenditures means a leaner balance sheet. Less fixed costs means
better revenue-cost matching. Additionally, cloud-based economies of scale plus competition
will assure that variable unit-costs keep trending down and hence improve your bottom line.
The Organization, Operations and Business
Estimating IT resource requirements, not to mention timely implementation, to smoothly run the
various business operations is notoriously difficult. Too much capacity binds valuable financial
resources and risks that by the time the resources are being needed, they no longer fit the
business model. On the other hand, not enough capacity is equally harmful as opportunities can
not be satisfied and business growth is held back.
The cloud computing model, on the other hand, allows you to quickly scale up or down
compute, storage and database resources, as you need it. Moreover, given globally deployed
capacity of cloud service providers, allow you to quickly and easily expand your business into
other geographical markets and not only be close to your customers but also be able to

2. compete with local competitors. And lastly, cloud-computing provides you the opportunity to
quickly develop, test and, if needed, adapt existing services or new business offerings. Cloud
computing shifts the focus from running the IT infrastructure to developing and implementing
new business opportunities, fast and flexible.
Conclusion
Cloud computing is disruptive. As the real and tangible benefits of cloud computing become
better understood and ever more apparent, the case to move your data center operation into the
cloud becomes imperative:
- Shifting from capital expenditure to operational expenses
- Reduce data-center operations and management fixed costs
- Reap the benefits of cloud computing economies of scale
- Eliminate on-site data center capacity estimating
- Rapidly and easily expand your business into global markets
- Speedy and flexible introduction of new business offerings
- Reallocation of IT resources to projects that directly affect your business
These are the concrete factors supporting the case for cloud computing. As it often happens
with disruptive technologies and paradigm shifts, many more benefits, possibilities and
opportunities will emerge as we start to fully comprehend the full potential of cloud computing.