Adopting a cloud strategy in the next year should be a top priority for enterprises wanting to stay competitive. Gartner predicts that by 2020, cloud will increasingly be the default option for software deployment. In fact, having a “no cloud” policy could become as rare as an “no internet” policy. Moving onto the cloud not only offers competitive advantages but also crucial digital business benefits.

Advantages of Public Cloud Deployment

Among the different types of deployment options (on-premise, managed hosting, private cloud, etc.), public cloud deployment can be highly valuable to enterprises for the following reasons:

1. Cost Savings: Deploying through a public cloud solution reduces infrastructure costs as well as IT spending and maintenance. When factoring in hardware expenses, such as electricity bills and upgrades, a cloud solution delivers business value faster and with less associated costs. According to a recent TechTarget survey, more than 31% said that the main reason for using a public cloud was for a reduction in infrastructure costs.
2. Greater Flexibility: Cloud solutions are better suited to handle the demands of your business. When growth or seasonality shift the needs of your business, the cloud's flexibility allows you to respond accordingly — resulting in a more timely response and a better customer experience.
3. Faster Time to Market: Implementation is made easier with public cloud infrastructure. Right from the start, developers have everything necessary — from infrastructure to environments — decreasing time to market and allowing your business to hit the ground running.
4. Ease of Use: Overall, cloud solutions simplify infrastructure management. IT teams no longer need to maintain physical servers and instead can use convenient interfaces on cloud solutions for easier configuration and monitoring.

Read more about the key benefits of cloud deployment for enterprises here.

Comparing On-Premise and Cloud Deployment

But even with these benefits of the cloud, determining whether migrating to the cloud is a tangible action your business should take requires hard data and numbers to inform your decision.

To figure what which deployment method to pursue, compare the total cost of ownership (TCO) of a cloud versus an on-premise application system. Here are a few costs to consider in order to successfully implement and manage an on-premise system.

1. Upfront Costs: The investment that an organization can expect to pay before going live with a new application system includes design, build and deploy phases. Examples of upfront costs would include hardware, network equipment and storage costs.
2. Recurring Costs: The upfront costs only make up a part of the total costs and operating expense to support the enterprise application. Ongoing maintenance and upgrade costs need to be considered as recurring costs for on-premise infrastructure. It’s important to remember that hardware and software depreciate over time; so it only has about three to five years of useful life before requiring an upgrade.
3. Intangibles: In addition, there are other intangible costs that need to be accounted for such as security costs, costs to scale up and opportunity cost.

In comparison, here are costs that need to be considered for Cloud deployment:

1. Upfront Costs: Although needing a lower upfront investment, cloud applications require regular subscription fee payments.
2. Recurring Costs: In order to effectively use the cloud application, organizations need to invest in highly trained IT teams. The cost of training is ongoing as cloud applications continue to improve and adapt to changing business needs. Consulting costs may also be included if needed.
3. Intangibles: Cloud intangibles include downtime, which can impact labor productivity, revenue and reputation. Additionally, the time and effort required for remediation and service-level agreements (SLA) also impact the total cost. In order to tackle these intangibles, cloud providers need to enforce policies such as uptime commitments and high availability.

For a full list of key factors needed to calculate TCO for on-premise and cloud solutions, click here.

Moving onto the Cloud

Weighing the costs against the benefits, it’s clear to see that migrating to the cloud is a better choice than on-premise solutions. The flexibility, reliability and cost-savings make the cloud a strategic long-term solution for your business. Forrester says, “the cloud is not only a viable option for an even larger class of enterprise applications and workloads, it is often the preferred method for gaining competitive advantage in the age of the customer.”

Accelerate innovation and free up your resources by shifting focus to infrastructure management to your core competencies using cloud services.