Why Cloud Communications Makes Business Sense
Determining true TCO takes more than just comparing bills.
While most No Jitter readers are well-aware of the benefits of cloud communications, you also know that not every organization has moved to the cloud for business communication services. There is still some caution on the part of organizations that need to justify their investment quantifiably in any technology, including cloud UC services, or UCaaS.
Consider the Financial Big Picture?
Many businesses are moving to cloud business communications for the expected cost savings, but how can they determine what those cost savings actually are? What should they consider as part of the decision-making process?
To help address such questions, I recently co-authored a Cisco BroadSoft-sponsored whitepaper with fellow BCStrategies experts Phil Edholm and Dave Stein. The whitepaper introduces a total cost of ownership (TCO) tool to help customers identify not just the cost savings of the cloud, but the additional hard and soft benefits they can achieve from cloud communications.
When looking at new technology purchases and vendor options, many businesses just compare the hard costs represented on billing statements. However, true TCO goes beyond a billing comparison and incorporates labor and opportunity costs and the value of the business benefits a technology may provide.
As we note in the whitepaper, measuring return on investment (ROI) is another, even more comprehensive way, to assess business benefits, by including the value gained by reinvesting your capital into your business or other investment vehicles. These benefits can be viewed in terms of "hard" cost benefits, as well as the value that the company receives, or "soft" benefits, and the real business value of retaining your capital for other investment or business growth purposes.
Hard and Soft Benefits
Identifying the hard benefits of cloud communications is relatively easy. These include reduced hardware and software costs, reduced or eliminated support and maintenance costs, reduced IT staffing and associated costs, ability to stay current with new releases and updates, the ability to scale up and down as needed, and so on.
However, to really determine whether moving to UCaaS makes financial sense, you also need to look at the soft benefits. While harder to quantify, these soft benefits can outweigh the hard benefits, and be the deciding factor when evaluating options.
Some of the key soft benefits that businesses must take into account include flexibility, risk avoidances, and opportunity cost advantages. Companies can focus on their core businesses rather than on managing and maintaining their communications equipment.
With the cloud, a business only pays for the seats or licenses needed. The flexibility of being able to add and remove users as needed is especially useful for tax preparation firms, retailers, and other companies with a great deal of seasonal workers. Companies can adjust for seasonal spikes without having to purchase licenses they only need part of the year.
Obsolescence avoidance is another key soft benefit. With technology changing so rapidly, it's important not to be tied to something that may become obsolete in a couple years. Think about all the changes in our business communication systems in just the past couple of years -- team chat and team collaboration have become essential elements, while meetings and video have taken on even more important roles. To add these capabilities to a premises-based solution would require significant investment and resources, whereas cloud customers would have access to these capabilities as soon as the cloud provider makes them available.
Cloud TCO Tool
Understanding how your company can benefit from the cloud is key as you make your business communication decisions. BroadSoft's TCO calculator was designed for business users looking to get a better sense of the financial implications of moving their business communications to the cloud. Read "Why Cloud Communications Make Business Sense" for guidance on how to determine what cloud communications cost savings actually are, and what else to consider as part of the decision-making process. To evaluate the cost of a cloud solution compared with an on-premises solution for your businesses, try out the TCO calculator yourself. Maybe you'll be convinced of the benefits of the cloud for your business.