Computer Economics

The Economic and Strategic Benefits of Cloud Computing

The Economic and Strategic Benefits of Cloud Computing

Traditional vendors of IT products and services sometimes argue that systems deployed on-premises are more cost-effective over the long run than their cloud-based counterparts. They claim that while licensed software may have higher acquisition costs, they are amortized over a fixed time period in contrast to software-as-a-service, or SaaS, subscription fees, which continue for the life of the offering in the form of recurring per-user fees.

Cloud providers, on the other hand, argue that the up-front savings are significant and that, in any event, the real benefits of SaaS are not in direct cost savings but in the strategic advantages that the cloud brings to the organization. Which side is correct?

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