One of the hottest topics in IT circles this past year has been cloud computing and the promises it has to offer. Advocates claim the cloud will provide substantial savings to enterprise IT, since acquiring servers and software licenses – as well finding IT personnel to manage and maintain infrastructure – has traditionally been time consuming and often costly. As technology develops ways to improve computing resources for businesses, companies’ infrastructures are also evolving to meet the needs of their users. Access to company networks is now more convenient with the advent of tablets and smartphones – regardless of location, employees are urged to view and upload data. It is this flexibility that cloud hosting can also offer, removing the need to invest significantly in equipment and software.

Traditional business IT environments spend about 70 percent of their budgets on maintenance alone, while only 30 percent is allocated for innovation and increasing productivity.  Moreover, deploying these innovations often takes longer because of over-burdened resources.  IT personnel are frequently spread too thinly, with tight budgets and complex, under-resourced systems.  This is exactly where cloud hosting can showcase its benefits by lowering costs and outsourcing much of the day-to-day maintenance.

Cloud hosting is a new service that provides storage and a range of other features to individuals and enterprises via the cloud. Unlike traditional hosting services, those services provided by the cloud offer their clients use of an unlimited number of servers that will act as one machine. Since more than one server is involved, there is no upper limit to resources, and crucially no single point of vulnerability should servers fail – if one goes down, the rest take up the slack. Service Level Agreements (SLAs) specify how a company’s data and resource management is governed.

So, put simply, how exactly can companies save money by migrating to the cloud? Firstly, there will be far less need for IT capital expenditure and maintenance expenses.  Purchasing servers and other major IT equipment is no longer necessary.  Since there is no need to invest in major IT equipment, cloud hosting is an ideal service for small and medium-sized enterprises.  Small business owners can have sophisticated IT resources without capital investments on hardware and software.  Moreover, equipment maintenance is the responsibility of the cloud host provider, as well as regulation of the system’s performance.

Unlike dedicated hosting, the cost of cloud hosting is not fixed – monthly payments to the provider depend on usage.  This allows the company to scale down consumption or scale up on demand.  As a matter of fact, companies will have the ability to turn off its virtual environment when not in use or during weekends to further save on cloud computing costs.  This flexibility is not inherent in a capped dedicated hosting service or in an internal IT infrastructure that will consume just as much resources regardless of use.

Finally, the provision of IT personnel can be trimmed down to a bare minimum if the majority of tasks are outsourced to a cloud host provider.  This translates to minimal labor costs, including both wages and benefits.  Once again, this fact affirms that cloud hosting is the perfect IT system set-up for small businesses.  Cloud hosting will work ideally for an organization that operates a lean personnel model.

With more and more IT service providers offering cloud hosting, costs to the client may decrease as competition in the market increases. At this point, some enterprises are still wary of the new technology.  However, fears about security and dependability are expected to taper over time, as more companies test the waters and new innovations and technology address those existing concerns.