In addition to the initial investment for on premise computing, organizations are

required to pay for ongoing maintenance, hardware, and IT personnel costs.

As a company grows the cost of purchasing more equipment and additional software
programs to support growth can be significant. On the flip side, when a company
shrinks? Extra equipment sits unused and the on-going maintenance may not be
reduced significantly.
Maintaining infrastructure requires the IT department to install new hardware when it is
purchased and integrate it into an existing network. On top of the initial work, the IT
department spends additional time monitoring and removing viruses and malware,
performing system upgrades and running backup programs to secure business data.
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Cloud computing has solution for all
The biggest benefit of cloud computing is reducing upfront, capital investments needed
for IT infrastructure
Cost of on-premises servers and software can be reduced by migrating some or all
business function to cloud. Cloud service provider will take care of capital expenditures,
maintenance, monitor and security, and the company has to pay as it operates it and
the model based on subscription plan.

Cost benefits of cloud computing

 Scalable hardware means pay per use
cloud computing mean high utilization and smoothing of the inevitable peaks and
troughs in workloads. Rather than using a dedicated server that you own, maintain, and
pay for regardless of demand, your workloads will share server infrastructure with other
organizations' computing needs. This allows the cloud-computing provider to optimize
the hardware needs of its data centers,
 Energy cost saves money
On-premises servers won't be fully-utilized, which means that regardless of demand
energy cost is more as compared to cloud. A cloud service provider can charge less for
energy used than spending in on premises.
  Reduced Staff Expenses
Cloud Computing is the ideal tool to rethink the business structure by giving in
outsourcing IT processes and reduce in IT Staffing cost and is much smaller amount as
compared to the on premise IT Staff
 Cost optimization and no capital investment

The Cloud allows to use take advantage of the latest and most up to date resources,
networking and security solutions without infrastructure cost or high initial investments.
Avoids financing the investment for the equipment and the staffing necessary to make it
all run the way it is supposed to and all the infrastructure elements are provided by the
Cloud vendor.

Total Cost Ownership Analysis

Let’s assume that refresh of infrastructure every five years. new server will be
purchased in the first year and replace it in the fifth year. A company would save an
average of 79% in its IT budget by opting for a cloud solution.
In the first and fifth years of the cycle, expenses include server installation,
configuration, initial maintenance and support. But with a cloud server, staff would
spend little to no time dealing with these tasks. so the company saves 90% in the first
and fifth years with a cloud solution. For years 2-4, the costs for both on-premises and
cloud solutions are limited to maintenance and support. The costs linked to hardware,
such as HVAC, aren’t necessary with a cloud solution. Consequently, the company saves
up to 58% with cloud servers.
Policies to optimize Cloud Cost
automated policies to optimize cloud costs, such as shutting down unused workloads or
rightsizing instances. This represents an opportunity for increased efficiency and
increased savings, since manual policies are difficult to monitor and enforce.