One of my more popular articles in recent months was a piece I wrote back in February about cloud computing. While researching information on the cloud, Bob Spiegel, founder of web hosting provider QuoteColo stumbled across my article. When Mr. Spiegel subsequently shared a really cool new cloud computing infographic that QuoteColo created and offered to write an accompanying piece about it for Trading Common Sense, I was very interested to see what he had to say.
And that’s my cue to shut up and let the professional take over:
The True Impact of Cloud Computing Spend
Bob Spiegel, QuoteColo
As a business owner, what is your number one concern? Good employees? Good products? Good bottom lines and profit margins?
While the most important thing in business might vary from one company/owner to the next, one thing is certain across all business: without turning a profit, no one survives. Unless you’re Jeff Bezos of Amazon, which constantly seems to be operating in the red, no business stays in business by hemorrhaging cash.
With this in mind, take a look at QuoteColo’s infographic covering the future of cloud computing.
If you scroll down to the section covering “Cloud Computing Spending by 2016”, the figures are easy to understand. By 2016, North American cloud spending will rise to $250 billion, Western European spending will rise to $104 billion and Latin American cloud spending will reach $21 billion. Asia Pacific and the greater China round out the projections at $16.2 billion and $5 billion, respectively.
With cloud spending rising year-over-year for various reasons – satisfaction with service providers, constraints on IT budgets, rising productivity levels, greater communication tools – the real issue at hand here isn’t why companies are moving to the cloud. Rather, the real question to ask is how does overall cloud spending impact SMB budgets for the better?
Cloud Savings and Reinvesting
In a study conducted by Rackspace and the Manchester Business School, 1,300 UK businesses surveyed showed average annual operational cost savings of £316,000 (roughly $498,000 USD) directly tied to the use of cloud technologies. The study found that some companies saved as much as £5,000,000 per year (roughly $7,882,025 USD). Of the companies surveyed, half stated they will use funds saved by cloud tech to fund a new service or product (R & D), while 15% of respondents stated that they will be creating new positions in the company.
From the same study:
- 56% of companies stated they have seen funds directly saved from cloud tech
- 49% have grown their business as a direct result of cloud tech savings
- 60% of companies stated cloud tech helped reduce their internal IT infrastructure, allowing for increased focus on strategy and innovation.
Again, in most cases it isn’t enough to simply show savings. The more important question for cloud providers is how to build a solution which will save companies money, allowing them to reinvest in their own products/people, in an effort to make the market a better place. For the cloud provider, aiming to be a cost saving mechanism is the key to success.
We all know that every business, regardless of its size, needs to turn a steady profit. Whether a company does that by cutting employees, cutting benefits, gaining a larger market share, producing better products or by plowing profits back into R & D, is their choice. These things being said, the ability to have more cash on hand caused directly by SMBs switching to cloud based technologies is something that all business owners should be happy about.
I want to thank Bob Spiegel and George Pirvu at QuoteColo for sharing their time and their statistics on the cloud. Anyone who operates a small business and is wondering if cloud services could improve their operation should check out their site.
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