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Cloud disruption is real

Deloitte Private

Cloud disruption is realAt first glance, cloud’s business impact may be analogous to what happened within the music industry when its distribution shifted from analog to digital — but in many ways it is much broader in scope and scale. In music, the shift to digital opened the door to innovative products and services that were previously unimaginable, creating new markets and turning the music industry upside down. Consider the case of Apple, which began its remarkable ascent with the iPod music player and rode a string of subsequent successes — including the iTunes ecosystem, iPhone and iPad — to become the dominant force in music and mobile devices, and—as this is being written — the world’s most valuable company.

But the business impact of cloud isn’t limited to just a few industries or a handful of companies. Businesses of every shape and size are using cloud and SaaS to gain instant access to world-class IT capabilities without having to spend time and money acquiring, developing and maintaining their own IT systems and applications. This new model enables large companies to respond more quickly to market shifts and emerging business opportunities, improving their agility and flexibility. At the same time, it enables smaller companies to grow at unprecedented speed and in some instances to compete on equal footing with businesses that are much larger.

SaaS and cloud are better, faster and sometimes cheaper

According to a Forrester survey1 of more than 1,000 firms across North America and Europe, cloud buyers anticipate the following benefits:

  • Lower cost both upfront and long-term (48 percent of respondents anticipated long-term cost savings from moving to SaaS)
  • Faster delivery of application features as well as greater business agility
  • Better support and satisfaction.

These findings suggest that cloud solutions are cheaper than on-premise solutions, but that’s not always true. Although the upfront costs of SaaS are generally lower, a recent Gartner study found that over the long run, defined as five years or more, infrastructure and license costs of on-premise solutions are often less expensive than SaaS.4 This is particularly true for businesses with highly efficient IT operations. Although cost remains an important decision factor when considering SaaS, it should not be viewed as the entire business case.

1. The SaaS Market Hits Mainstream: Adoption Highlights 2011,” Forrester Research, May 3, 2011.

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