Tellingly, when they are asked about what the loaded cost of associated services like ongoing system administration, not to mention IT support personnel such as HR and finance, one usually discovers that they have no idea what those costs are or how much should be applied to the on-premise option to enable a fully-loaded cost comparison.
One can predict that cloud computing will witness the same explosion of use as its lower costs start to be internalized in project budgeting assumptions and projects that couldn't have been justified in the past become economically viable as apps in the cloud.
3. The Cloud Fosters Experimentation and Innovation.
When something costs a lot, one treats it carefully. In software terms, expensive proprietary software reduces most organization's willingness take on projects that aren't absolutely necessary, for fear of making a mistake and wasting money. Obviously, this means organizations are less willing to try something new when outcomes, even if potentially highly successful, are unpredictable.
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When open source became available, it meant that trying something new cost much less, so it was less important to approach new projects cautiously. Open source encouraged experimentation and fostered innovation. IT organizations could try something out-and quickly, due to ease of access-and determine if it held promise. If the experiment proved to be unrewarding, little was lost, and the project could be easily scrapped, making it possible to pursue other, more promising options.
The low cost of cloud computing has the same kind of effect. When IT personnel consider doing something-whether it's prototyping a new application, developing a new business offering or putting together a proof of concept to share with customers or users-the possibility that it can be done for just a few dollars means that they will give it a go. If it doesn't work, little is lost. I have seen many examples of organizations developing innovative applications in cloud environments because the cost of failure is so much lower than ever before.
4. The Cloud Lowers the Cost of Uncertainty.
Another reason IT organizations have traditionally been conservative about new software investments is because established applications have much less uncertainty associated with them. Since the investment is going into something that the organization is already familiar with, it has much more ability to predict how the application will be used and how its user base and load will grow.
The downside of doing something innovative is that it might take off-which, when expensive proprietary software is in the mix, could end up being highly expensive. Doing something just like everything done before means much less probability of getting an emergency request for a budget variance to buy more costly software.
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