The economics of cloud vs. On-Premises: Debunking the Myths
Technology, like any field, has its fair share of myths and misconceptions. One pervasive belief is the notion that cloud computing is either more expensive or less expensive than on-premises (on-prem) computing. However, the reality is much more nuanced.
Efficiency Leads to Increased Usage
When organizations adopt a new, more efficient technology, its consumption spikes as it becomes the solution used to address a wider catalog of problems. As a result, cloud usage tends to increase, leading to potentially higher overall cloud spending compared to on-prem.
It is about your goals, not just the cost
The comparison between cloud and on-prem computing is not as simple as choosing the cheaper option. It’s more akin to comparing two cars, one of which is cheaper but lacks a steering wheel. The cheaper car is not necessarily the better choice, as it may fail to reach the desired destination.
Businesses often measure success in terms of Return on Investment (ROI), and the primary value proposition of cloud computing is not just cost, but agility. Agility allows organizations to do the right thing, rather than merely doing the wrong thing more cheaply. This agility is crucial for running an effective business.
The pitfalls of replicating On-Prem practices in the cloud
Another potential pitfall is when organizations try to replicate their on-prem practices in the cloud, without fully leveraging the cloud’s capabilities. This can lead to a more expensive solution that provides less value, leading to the perception that “everything is terrible since we moved to the cloud.”
The hidden benefits of the cloud
Often, those who claim that “cloud is more expensive than on-prem” are not considering the hidden benefits and capabilities of the cloud. These include the cost of replicating the physical security of a data center, the effort required to set up a global content delivery network (CDN), or the professional management of services like databases.
Additionally, the cloud’s built-in redundancy and risk mitigation features, which may come at a higher cost, can provide significant value by ensuring business continuity and avoiding costly downtime.
Conclusion: Cloud computing is different, not cheaper or more expensive
In conclusion, the comparison between cloud and on-prem computing is not simply a matter of cost. It’s about the value proposition and the agility that the cloud can provide. By removing important context and oversimplifying the comparison, we risk overlooking the true advantages of cloud computing. The better measure is not cost, but the organization’s ability to achieve practical solutions and reach its desired destination
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