- The cost benefit analysis of soft cost expenses is more difficult to ascertain than hard cost but the impact can affect the bottom line.
- Cloud desktops enable businesses to eliminate server hardware and related licensing costs.
- Fees for cloud desktops are generally based on the number of users and resources consumed each month.
CFO Viewpoint: How Do Cloud Desktops Help Save Costs?
Many businesses face dilemmas determining which services are best maintained in-house versus those that should be subcontracted. Some decisions, such as a yard maintenance service, are straightforward, whereas decisions related to technology require careful business and technical consideration.
Looking at IT-related decisions from the standpoint of the CFO, financial viability and service advantages are key considerations that should be addressed alongside technical feasibility. As such, we shall review the costs associated with in-house IT systems and compare those with cloud desktops.
In-House: Hard Costs and Soft Costs
Hard costs are the primary consideration for CFOs; these include items such as employee/management costs, consulting, server hardware, asset financing, and licensing. Soft costs secondarily impact financial decisions, including employee productivity, competitive advantage, and flexibility.
Paying for the right people, systems, and equipment affects the bottom line. Where an in-house computing solution is deployed, paying the salaries of high-level IT staff, including security experts, may be financially prohibitive. Further, recruiting fees, employee benefits, and staff training must be factored into total costs. In addition, the costs associated with the computing systems, including server hardware, network equipment, service agreements, and data center space, power, and services, as well as operating system and application licensing, have a profound impact on the IT budget. Hard costs are straightforward and easy to calculate.
Although soft costs are more difficult to quantify, these items do indeed impact every business. Will an IT-related expenditure enable the business to compete more effectively or gain an advantage in the market? Will employee productivity increase due to a new application or a new computing process? Will system flexibility enable more employees to work from home, saving real estate space? The cost/benefit analysis of these items is more difficult to ascertain than hard cost expenditures, but the impact can indeed affect the bottom line.
Small businesses in particular struggle with maintaining end-user computing services. For example, hiring a security expert is cost prohibitive for a small business, but yet, leaving the IT systems vulnerable and falling prey to hackers could destroy the enterprise.
Adopting cloud desktops is particularly appealing for small businesses; however, many medium-sized enterprises also find this technology advantageous. In addition to minimizing hard costs, engaging a Desktop as a Service (DaaS) provider delivers additional functionality that would likely be otherwise out of reach for in-house systems.
Cloud desktops enable businesses to eliminate server hardware and related licensing costs entirely. Because the DaaS provider maintains all computing systems, all costs associated with procuring server hardware and related network equipment, including licensing, are eliminated. For example, if an in-house system is dependent upon large servers that support hypervisor functionality, these costs, as well as related network equipment, would no longer be necessary. In addition, the in-house staff needed to support cloud desktop administration is minimal. The savings related to hard costs alone is typically enough to justify cloud computing. And there are many additional benefits.
DaaS providers take responsibility for support desk associates, system maintenance, and security. This includes not only the IT staff, but also change control systems, help desk ticket applications, after-hours anti-virus updates, backup/restore processes, system reliability commitments, and more. The service level that DaaS providers offer is often far superior to that which a small- or medium-sized enterprise can provide in-house.
Fees for cloud desktops are generally based on the number of users and resources consumed each month. DaaS providers are able to offer services based on a mass scale, and the cost is thus more reasonable for each enterprise. For example, DaaS providers are able to employ security experts that oversee the resources of a large number of clients, thus the salaries, benefits, and training costs for this expert group are a fraction for each enterprise and built into the charges. Small and many medium-sized businesses cannot afford to have this breadth of staff expertise.
If a major issue were to arise, such as a security or application access issue, DaaS providers have sufficient staff to address an issue quickly. Once a Priority 1 (P1) status is declared–implying an emergency situation wherein many users cannot access resources–numerous individual with various areas of expertise s are assembled to focus on remediating the problem in short order, as well as communicating status with the client.
Compare that with an in-house system that relies on calling technical support or a consultant in order to determine where an issue lies and then working through remediation. The cost for these emergency services from the DaaS provider is included in the monthly fees and actually represents a cost savings because downtime is minimized. Because downtime equates to lost revenue within every enterprise, having a group of technical experts immediately available ensures that service impact is minimal.
How Do Cloud Desktops Save Costs?
While the exact numbers for each enterprise will vary, cloud desktops invariably represent a cost savings, especially for small businesses. Hard costs alone will likely justify the financial aspects of cloud desktops. Of course, each CFO should calculate the current hard and soft costs in order to determine specific savings that can be realized by adopting cloud desktops.