Insights 11 June 2020

Cloud Technology is the Real Hero in Supporting Efficient Management of IT Expenses During COVID-19

Organizations can reduce IT expenses in this critical time by tapping into Cloud computing, which is a technology for storing and processing data over the internet with less costs than traditional servers, as expenses are calculated based on actual usage, with significant factors for leading to successful Cloud application.

Amid the impact of the COVID-19 pandemic especially on businesses around the world, organizations are trying to find ways to adjust their business strategies and to come up with new work methods for surviving in the situation. Most of them are focusing on policies to handle costs and reduce expenses. Despite the policies, businesses expenditure with hope to generate appreciate in the future, especially sunk costs and fixed costs, is hardly to be kept down. Thus, the fixed costs become a significant threat and jeopardy to the businesses at this moment instead of variable costs which only incur when there are incomes.

Unavoidably, large businesses are clinging to expenses for building IT infrastructures, most of which turn into big investment expenses including subscription that has been paid in monthly installments. In the time of COVID-19 situation, IT system investments have not been optimized and funds have been wasted. Therefore, what the business sector should really undertake is transferring from IT system expenses to variable costs for enhancing liquidity, which is  compared to the blood of company, and creating business opportunities at the same time for aiding businesses to continue.  

During the crisis, businesses are perfectly in advent moment of implementing Cloud computing technology so as to reduce costs from establishing on-premise servers and networks. Also, it eases difficulties of installing and administrating systems by saving time and loosing flexibility on expenses. At present, Cloud computing services can be adopted in the following 3 forms.

  1. Infrastructure-as-a-Service (IaaS): To provide services relating to infrastructures and data storage systems, or act as a server.
  2. Platform as a Service (PaaS): To provide platform services for software such as web applications, database servers, or API systems with a high level of security; and
  3. Software as a Service (SaaS): To provide software and application services. Most of the services are charged on a ‘Pay-as-you-go’ basis such as numbers of users, usage volume, usage duration, etc. Giant software service providers include Microsoft 365 and Google Suite.

There are considerable benefits from using the Cloud computing technology to support businesses not only during this time of crisis, but also in the future of New Normal, including:

1. Cost Efficiency: Businesses manage expenses more efficiently as Cloud technology helps them pay less money than traditional ways of investing in servers, in which a few of people use the services at the beginning causing the lack of economies of scale and missing breakeven point, whilst the Cloud system enables payments according to actual usage as a concept of pay-per-use.

2. Shortened time to market: Businesses can reach the market faster and save more costs from developing their own systems. Although some businesses see the need to have applications, during the COVID-19 outbreak, developing ones’ own applications from scratch may limit their ability to compete and stay in the game with other rivals or cause them to lose business opportunities.

3. Anywhere – Anytime: Cloud technology helps working anywhere-anytime possible as the system will be connected to the internet. The only thing needed to create a workstation is a device connecting to the internet. For example, with the ‘Work from home’ policy, many companies turn to use ‘Software as a Service (SaaS)’ services from several providers such as Microsoft Team, Google Hangout, etc.

4. Flexibility: Cloud facilitates operational flexibility as it allows businesses to adjust themselves to changing circumstances, such as scaling up business presence to speed up growth upon the emergence of golden opportunities to earn income or scaling down operations once there are less usage needs, particularly during the spread of the COVID-19.  

Cloud computing technology may not represent all solutions to business needs as each business is different and has its own characteristics. Top executives and IT chiefs must work together to analyze economic pros and cons to identify how the Cloud technology can fully add value to businesses. Also, every employee must understand their organizational vision and business direction. Cloud is another technology that requires collaboration between business and IT functions in designing a structure and a right proportion of each function’s usage to ensure maximum value creation. There are 3 key factors leading to successful Cloud application.

Understand your IT capabilities – Before implementing Cloud technology, it is advised to assess the organization’s IT capabilities to see if they allow for the use of technology. If there is a legacy system (on premise,) it is required to consider migration which is a complicated matter. There should be an expert to help analyze and compare the current system with a suitable system to design a compatible IT architecture.

Develop migration roadmap – In developing a system migration roadmap and uploading data into the Cloud system, businesses can choose to enable the use of Cloud services from both the selected vendors and the on-premise system parallelly (hybrid Cloud). A sound migration roadmap should allow for an independent migration of systems or applications from each individual service provider to reduce reliance on one particular vendor.

 Adapt ‘Agile’ to organizations – To ensurea successfulCloud transformation, organizations must adapt an agile work style as they must be nimble and able to change plans at any time in order to find the best structure solutions for themselves. Consequently, employees shall be proactive and adjust themselves to always be ready for changes.

Nonetheless, businesses interested in or starting to use Cloud as their solutions may experience some difficulties in administration as they need to analyse and compare to current practices of data storage or business operations including the steps or the complexity of migrating the current information to the Cloud system.

Finding an expert in this aspect to lend a helping hand could be a sound option and help improve work process efficiency as businesses should focus on direction rather than going into details about administration by themselves. Most importantly, it is better for the businesses to shift their focus to planning and adjusting strategies to find ways to earn main incomes and weather the upcoming storm of economic recession.