Benefits of Cloud Computing | A Detailed Comparison of Cloud vs Legacy IT

Most organizations use various forms of cloud computing today. But what exactly is cloud computing, and what are the benefits for enterprises?

This article explores these questions from both technical and business perspectives, highlighting the advantages companies gain from using cloud computing services.

By the end of this article, you will also understand the difference between “legacy” IT and cloud computing.

What is Cloud Computing?

Cloud computing is the on-demand delivery of IT services from a third-party provider over the Internet. This means you consume services provided by another company, known as the “service provider,” typically on a pay-as-you-use pricing model.

There are multiple cloud computing service models (e.g., IaaS, PaaS, and SaaS) and deployment models (e.g., Public Cloud, Private Cloud, Hybrid Cloud, and Multicloud), which are discussed in detail in other articles. Here, we’ll focus on the key benefits of cloud computing and how it is advantageous compared to “legacy IT.”

Legacy IT

Legacy IT refers to self-managed systems deployed within a company’s own data center (on-premises) or in a shared data center (co-location) where the company leases space. This equipment is typically purchased and owned by the company and may also be fully or partially managed by the company’s IT staff.

This model requires significant capital expenditure (CAPEX) to cover data center costs, equipment purchase, software licensing, maintenance contracts, staff wages, and more. Equipment is usually depreciated over 3–5 years and must then be replaced.

Challenges with Legacy IT

• High CAPEX: Large upfront investment in hardware and infrastructure.
• Cash Flow Impact: Continuous expense on maintenance and upgrades.
• Scalability Issues: Difficulty in scaling up quickly to meet demand.
• Capacity Management: Risk of over- or under-provisioning resources.

Cloud Computing

Cloud computing addresses many of the challenges associated with legacy IT by offering several key advantages:

Variable Instead of Capital Expense

With cloud computing, you consume on-demand computing resources as services. In this self-service model, the service is metered, so you pay only for what you use. This shifts expenses from CAPEX to operational expenditure (OPEX), which is often preferred by finance teams.

Economies of Scale

Large cloud service providers, such as Amazon Web Services (AWS) and Microsoft Azure, purchase huge amounts of equipment and serve thousands of customers. This allows them to offer very competitive costs due to economies of scale.

Elasticity — Speed and Agility

One of the key benefits of cloud computing is its elasticity. You can scale your consumption of services to meet business demands, regardless of how fast your business grows. This elasticity is how companies like Uber and Netflix scaled rapidly. Additionally, if your business contracts, your consumption and costs shrink accordingly. This flexibility is particularly beneficial for startups and smaller companies.

Eliminating Capacity Guesswork

Organizations often guess how much computing capacity they need to purchase and provision. IT operations teams might overestimate capacity to avoid potential issues during peak times, leading to significant costs for unused capacity. With cloud computing, resources are delivered on-demand and charged based on actual usage, reducing wasted capacity and positively impacting cash flow.

Reduced Maintenance Costs — Focus on Growth

By reducing the costs and operational overhead of managing data centers and IT equipment, companies can focus more on projects that differentiate their business. In the competitive modern business landscape, innovation is crucial. Cloud computing enables businesses to allocate more resources to innovation and growth rather than maintenance.

Cloud Computing Security

Security is a critical concern for organizations considering cloud computing. Many are worried about losing visibility and control over their data and applications in the public cloud. However, understanding the shared responsibility model is key. This model defines the boundaries and responsibilities between the service provider and the customer. You are responsible for aspects like data encryption, operating system patches, and firewall configurations, while the provider handles hardware, software, networking, and facilities.

Security Responsibilities

• Customer Responsibilities: Encrypting data, patching operating systems, configuring firewalls.
• Provider Responsibilities: Maintaining hardware, software, networking, and facilities.

Major cloud providers like AWS, Microsoft Azure, and Google adhere to stringent security requirements and comply with numerous security certifications and attestations. In many cases, the security provided by these cloud providers surpasses that of most on-premises IT environments.

Conclusion

Cloud computing offers significant advantages over legacy IT, including cost savings, scalability, and reduced maintenance overhead. By leveraging the benefits of cloud computing, enterprises can enhance their agility, focus on innovation, and ensure robust security.

Understanding the shared responsibility model and the specific responsibilities of both the provider and the customer is crucial for maintaining a secure cloud environment. As cloud adoption continues to grow, organizations that embrace these technologies will be well-positioned to thrive in an increasingly digital world.

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