There are many advantages that can be gained from the use of cloud computing. Cloud computing is built upon the idea of economies of scale. The great thing about the concept of cloud is the potential cost-savings benefits that can be gained for a small startup, large company, or even an entire federal agency. reference
Cloud computing eliminates the usual high up-front cost that companies often cannot afford, allows for “infinite” resources on-demand, and provides the ability to pay for resources as they are needed. It also removes the need for special facilities and highly trained personnel dedicated to IT and the need to continually upgrade hardware and software as technology moves on and company requirements change.
In general, the use of cloud computing should reduce costs by companies paying for only the resources that are needed. Many companies do not know what the demand will be for their IT infrastructure, which previously meant that companies either over-bought servers or were overwhelmed by demand that could not be handled; leading to a loss of customers or degradation of service to their customers. In either scenario, there is a detrimental impact because money was inefficiently expensed on unnecessary hardware and/or potential sales were lost.
Maintenance of software can be just as big an expense for organizations as the initial purchase. With the use of cloud computing, software updates and backups are made without the organization having to spend time and money on these activities. This helps to alleviate many of the technical burdens that are often put on companies and allows them to concentrate on their core competencies while still gaining the advantage of having the most up-to-date version software.
Cloud computing allows a company to operate in an elastic fashion. Resources can be scaled up or down as needed by a project, consumer demand or operating need. The elasticity that is gained by cloud computing allows projects to proceed in a manner that is appropriate, without the time consuming and costly delays that the purchase of hardware and software has through the procurement process. Resources can be quickly provisioned/de-provisioned, which should result in a lower investment cost.
The use of cloud is looked at as an environmentally friendly approach. Currently, there are a huge number of server farms that operate to serve individual organizational needs. With cloud computing, a single server farm can support a large number of different entities, potentially reducing power requirements, emissions, and disposal of old electronics.