The Cost Effectiveness of Using Cloud Computing Research Paper

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Cloud Computing and Organizational Cost Management

The contemporary market trends have put a lot of pressure on many businesses to cut down on their spending and unnecessary costs using any reasonable measure. The globalization and the emerging trends in business demand that for any business to stand a chance to grow and expand across borders, it has to both adopt the current technology and do so at a reasonable cost that will not negatively impact on their profit margins. Investments into the information technology has been seen as one of the most significant and best approaches to not just cutting operational costs but also expediting the organizational processes, making the organizational systems efficient and also central in profit maximization of any organization. There are various technological advances that have been accepted in organization such as use of email as an official communication channel and acceptable documentation, teleconferencing, video conferencing and even online chat groups where employees from same company across the globe can exchange idea. Cloud computing is yet another central technology that is rapidly being accepted and adopted into many organizations with the ultimate aim of having their strategic and operational plans costing significantly lesser with the aid of cloud computing.

Thesis statement

Bearing that the use of network based applications is inevitable and central in the running of business on a daily basis, cloud computing is necessary in cutting cost and ensuring that the organization still runs efficiently. If done in the proper way and with the right cloud computing partner, this approach to network outsourcing is sure to help generate income and reduce the cost of operation. The paper delves into the available libraries and articles online to find out what the positive aspects in terms of cost effectiveness can be found in cloud computing, the associated risks that an organization gets into as well as the precautions that the organization considering cloud computing needs to take into account before committing fully.

Tenets of cloud computing

Cloud computing is the technology of utilizing a network of servers that are located in a remote location and hosted on a remote internet platform meant to store, manage and process data as opposed to the use of personal computers or even the local servers within the organization (Apostu A., 2014a: Pp118). The data stored in the cloud can be accessed and released to the organization within a short notice and minimal management effort hence cats as a quick storage and access point. The date is delivered-on-demand basis and the services are utilized on a pa-for-use basis as well (IBM, 2016). There are specific cloud computing software that cater for the specified market or customer needs, for instance those that are customer relations based, those that deal with human resource management, human capital man agent, enterprise planning and many other fields that have specialized cloud computing software that they vend to potential customers. Indeed many software vendors are increasingly switching to the cloud-based strategy as a replacement of their traditional delivery modes.

Since cloud computing is a utility, the cloud computing vendors often cater for the underlying infrastructure and software that are needed in the establishment of the remote cloud computing systems. The vendors will then enable the customer to be able to access the particular data from any location suitable for the client. This means that the vendor will charge the client for the service provided hence effectively cutting out the costs of having to erect an independent cloud computing infrastructure for the organization. The vendor provides the software as a service (SaaS) and the software has multitenant utility hence many customers could be using the same software all at the same time, a fact that compensates for the financial inputs engaged hence making their profits as well (Radack S., 2012:Pp4).

The cost related benefits of cloud commuting

One of the most outstanding and obvious reason why any organization would get into having their data hosted in a remote central server and also access software from same place is due to the related reduction in the computing costs. The cloud computing technology enables organizations and businesses to have access to large volumes of software usage, data usage and data storage facilities and services at a minimal upfront cost. The organizations that utilize the cloud computing solutions avoid the capital input in the infrastructure and the hardware needed hence the costs are met by the vendor companies who invest in such ventures (Macias F., & Thomas G., 2011).

The other cost benefit to the organization whose data is stored in a cloud technology is the passing of the infrastructure maintenance cost to the vendor.

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As Apostu A. et.al, (2014b) indicate, the firms will minimize the costs of maintaining as well as regularly upgrading both the hardware and the software and the primary infrastructure. The vendor takes up the cost and the responsibility of ensuring the server has the latest and updated software as well as the best hardware that will ensure the safety of the data they store for customers.

More organizations have also opted for the use of cloud computing in their software solutions since unlike the traditional standard software that will require money in licensing for use and the annual maintenance fees in order for the organization to continue using it effectively in their computers, most cloud computer software vendors will eliminate both of these fees. Most of the vendors will bill the organization on a monthly basis or on quarterly intervals according to the user basis. This turns out to be cheaper and more effective for organizations since they would not have to pay for the time that they do not use the software and it sits idle in the computer, not being productive as would be the costly traditional software licensing.

The benefits of the cloud computing transcend the savings that the organization can make as noted above and involves the ability to expedite work within the organization. The technology allows for the implementation of new applications faster than the traditional format. This is because the cloud computing vendors have large capacity for redundancy which can be used to provide for any higher demands and provide scalability. This means that the operations within the organization will be at an optimum at all times, leading to higher productivity as supported by the relevant software from the cloud computing vendor. The vendor will also give the customer a guarantee of the up times of their server and having back up platforms for operating incase of a hitch in their servers. They will also assure the customer of the recovery process hence security for the data and also relieve the customer of the burden of investing in hardware and software for data backup (Intel, 2016). These are costs that are cut out of the annual budget for the organization hence more organizations tend to prefer and opt for the cloud computing approach in operation, storage and support of their software and systems.

With the onset of the cloud computing into the organization, the IT approach necessarily changes and the IT skills that are needed to use and handle the software changes. This means that as the applications move to the cloud, there will be lesser need for people to install, configure and maintain the software. There will also be fewer hardware used hence the need for the manpower to help maintain the hardware will also go down. The IT team will have to be reduced and only a few who will be helping in the implementation of the program by showing the members of staff how to use the software will be retained. This measure will cut down costs that are related to hiring a large team to be responsible for the traditional operation of the software on each computer (Lee, L. S., & Mautz Jr., R. D., 2012).

Cloud computing has also brought into the organizations the work flexibility and portability of work. In the traditional system where the relevant software were installed into the office computer and would be used during the office hours only, the cloud computing has transcended such limitations. With the cloud computing possibilities, the individual can work from anywhere and as long as they are connected to the internet and have the required details they can continue with their work undeterred since the software is hosted at a central server and not personal computers. This has been noted to increase productivity among employees and managers who prefer to continue working beyond the capacity that the normal office hours may avail. It has also allowed those travelling away from the state or even outside the country to be able to keep updated on the ongoing of the organization and even work from far off distances (Mirashe S.P. & kalyankar N.V., 2010: Pp90).

The challenges of cloud computing to the organization

The concept of cloud computing is basically outsourcing a service to a vendor who specializes in the same, and just like all the other outsourcing….....

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