A Cost Benefit Analysis of Cloud Computing in Developing Nations
Developing nations are those which have not reached a high degree of industrialization and have little capital resources. Their business entities face stiff competition from developed nations who have branded and high-quality goods and services to sell. Use of advanced information and communication systems provide business enterprises the edge to stay ahead of their competitors. Cloud computing seems to be a viable option to overcome the basic problems, but a cost-benefits analysis needs to be done by every enterprise before opting for it. No standard formula is available of cost-benefit analysis. The generally accepted benefits and costs are as follows.
Benefits Of Cloud Computing
It is essential that the management of the business identifies the features which it truly requires in cloud computing and subsequent to implementation, ensure that it is used properly by its trained personnel. Under such circumstances, the enterprise can look forward to the following benefits to accrue.
- Capital costs are minimized since there is no need to spend big money on hardware, software or licensing fees by the business enterprise.
- Spending on technology infrastructure is reduced. Easy access to information is maintained with minimal upfront spending. Payments can be made on weekly, quarterly or yearly basis.
- Work processes can be streamlined to get more work done in less time with fewer people.
- Personnel training costs are low since it takes fewer people to do more work on a cloud, with a minimal learning curve on hardware and software issues.
- Licensing new software is minimized since the enterprise can stretch and grow without the need to buy expensive software licenses or programs. The cloud computing service provider will be maintaining all the new software available in the market.
- Ongoing projects can be managed more effectively even if these are stretched out geographically since they can be monitored from anywhere and at any time.
- Project costs can be maintained within the budget with the help of multiple configurable reports which can be generated on real time basis.
Low investment costs and minimization of personnel cost are seen as the most important factors which influence business enterprises in developing countries to opt for cloud computing.
The Real Costs Of Cloud Computing
Many types of cost elements have to be considered when moving over to cloud computing. There are some unexpected costs involved as well which may come as a surprise to business enterprises which have not fully understood the implications of migration to cloud computing. However, the businesses in developing nations should bear in mind of what types of costs came upon those in the developed nations which opted for cloud computing. The important ones are spelt out below.
- Moving and storing data costs a lot. Network bandwidth cost is critical for moving data. Cloud service providers may charge extra for upload and download of data and other costs like internal labor. Storage of data is also costly, considering the fact that past data is also required along with real-time data and payment has to be made for storing past data continuously though it may not be getting used frequently.
- Integrating apps of multiple vendors is a big cost burden since this will be a user specific requirement.
- Testing and debugging of the software can be costly since all applications may not have been run in cloud computing before.
- Performance issues may exist which may require modifications in the software of the ERP vendor which can get passed on to the business entity.
- Rent, utilities and set up costs can also be expensive.
- There will be a cost of employee turnover since many trained people may quit due to the lure of higher salaries in other places.
Cloud computing has now moved out of the hype stage and it has been seen that business entities opting for cloud computing are getting tangible benefits in the developing nations as well.