Cloud Profitability
Cloud computing is quickly emerging as a desirable solution that involves the provision of on-demand and convenient networks to organisations (Jackson, 2011). Kroenke and Boyle (2015) have defined cloud computing as “the elastic leasing of pooled computer resources over the internet” (p. 199). This is a clear indication of the flexible nature of cloud computing, given that the leased resources could either shrink or grow depending on organisational demand. Moreover, the company will only have to pay for the resources used. Cloud computing has thus brought about a considerable shift in economic and business models, particularly in the consumption and provision of IT solutions. More importantly, cloud computing can lead to considerable cost savings for the organisation.
However, Jackson (2011) is quick to add that such cost savings may only be achieved when there has been considerable pooling of computing resources. By pooled resources, we mean that the cloud computing service is available to multiple customers to whom various virtual and physical resources can be reassigned or assigned based on the prevailing demand (Jackson, 2011). Such resource sharing occurs through a virtualization process. Thanks to cost sharing of the pooled physical resources, an organisation is exempted from having to incur huge costs in the form of maintenance, management, development, human resources, and support-related costs. Moreover, the company is immune to the risks of having to endure technical obsolescence.
An organisation that enlists for cloud computing services can also hope to benefit from the realisation of lowered IT costs and the ability to scale resources with a view to realising varying demands (Jackson, 2011). With proper implementation, cloud computing leads to a significant reduction in maintenance and operational costs of its IT infrastructure. With proper implementation, cloud computing leads to a significant reduction in a firm's maintenance and operations costs of its IT infrastructure.
The cost savings emanating from the use of cloud computing services imply that such a company will realise an increase in profits. Consequently, the rise in profits could be utilized in other activities of the organisation, such as increasing employee wages, increasing the headcount, or boosting innovation (Olavsruc, 2013). IBM is one of the organisations that has successfully implemented cloud computing in its organizational operations with the intention of improving and streamlining the manner in which the firm realizes its internal and external requirements for IT resources. Consequently, IBM is now in a better position to respond fairly quickly to varied customer needs. It does so cost-effectively. Thanks to cloud computing, IBM is now better able to provide its customers with scalable and flexible solutions during peak periods when the firm is faced with higher customer demands relative to the company’s internal IT capacity (IBM, 2009). This on-demand service allows the company to provide storage, servers, as well as networking capabilities as soon as a client places a request for such services. Additionally, cloud computing has enabled IBM to significantly enhance the productivity of the firm's European Benchmark Center. This center enables customers to test the performance of new IT resources (IBM, 2009). Previously, this testing would be completed within a week, but thanks to cloud computing, it can now be done in a single day.
Another company that has successfully implemented cloud computing and realised its benefits is Apple, the technology giant, through iCloud. This service has acted as a source of competitive advantage for the firms compared to other mobile device vendors (Moote, 2011). Through iCloud, Apple is in a position to offer considerable improvements to the firm's product line. This is achieved by the fact that iCloud enables Apple to synchronise the contents of individual devices. Besides locking in customers from moving to rival mobile device vendors, Apple also ensures that users do not experience the frustration often accompanied by a lack of synchronization of different devices.
In sum, cloud computing is associated with various cost benefits to a firm, thanks to the ability to pool physical resources. Consequently, a company can save on maintenance, support, and management costs, among other costs. Technology giants such as Apple and IBM have successfully implemented cloud computing and realised a competitive advantage over rivals.
References
IBM (2009). The Benefits of Cloud Computing: A New Era of Responsiveness, Effectiveness, and Efficiency in IT Service Delivery.
Jackson, K.L. (2011). The Economic Benefit of Cloud Computing.
Kroenke, D.M., & Boyle, R.J. (2015). Using MIS (10th Edition). New York: Pearson.
Moote, I. (2011). Apple - A Rare Case of Sustainable Competitive Advantage.
OlavsrucT. T (2013). How Cloud Computing Helps Cut Costs, Boost Profits.
