Posted by: drmiw | December 8, 2008

Cloud Computing calls in the Credit Crunch

I have been resisting writing about the credit crunch phenomenon until now because it’s been particularly crowded on that band wagon. Marketers have been scrambling to take advantage of the global panic, saying that their product or service is just what you need to weather the financial storm; and with hosted IT (cloud computing) services this is certainly true, but how can I say such a thing and why am I writing now?

Cloud Computing in credit

Reducing capital expenditure on IT infrastructure has always been an argument for hosted services, but when investment and loans were readily available, economies were growing and you could make long term business plans with a degree of confidence, this argument was not as strong. Now, of course, capital is hard to come by and the near financial future is bleak, but businesses still want enterprise grade IT systems.

Paying for hosted IT software and services per user per month as and when you need them – from a company like mine, Extrasys – makes particularly good sense when growth and revenue are not assured. Your company can quickly expand and contract, and your IT costs will vary accordingly. If you hire a temporary employee for one month and she needs Microsoft Visio and Project just for that month you don’t have to buy the software licenses outright, which would be expensive, you rent them for her for a single month. If she has a laptop or home computer of any type then that’s hardware covered, too.

Another strong driver for adopting cloud computing in these times is overhead reduction. Do you really need an office when most of your workers can work from home and you can hot desk the rest? Do you really need an IT manager to look after an office full of computers, their software, and a server or two when you could be computing in the cloud?

Not a lone voice when it comes to the crunch

The spur I needed to write this post was Kenny MacIver’s lead article in November’s Information Age magazine, crunch time for the IT industry. Writing about IT executives he says:

“In many cases, with cash in short supply, they will have to rethink some of the ways that IT purchases are currently financed and delivered to the business, swapping classic upfront capital expenditure on hardware and software licences for operating expense-based equipment leases, pay-as-you-go software subscriptions and all manner of outsourced services.”

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