5 Ways Cloud Distribution Software Can Cut Costs

Distributors can reduce costs by taking advantage of cloud distribution software and freeing up money that could be reinvested in the business.

A survey by Rackspace proves just how effective cloud solutions are at reducing operating costs, according to an article on its website. The survey included 1,300 businesses in the U.S. and United Kingdom. Nearly nine out of 10 companies that implemented cloud solutions saved money. Of those, 62 percent reported that they’re putting the savings back into the business. More than half of the respondents — 56 percent — increased profits with the cloud.

But is it really that simple? How do cloud-based solutions allow companies to reduce costs? Here are five ways in which distributors can realize cost-savings with cloud distribution software.

1. Reduce IT operational costs: When you’re using the cloud, your organization requires less technical staff for both hardware and software support. You also enjoy lower electrical and utility costs because you’re not running as much equipment on-site.
   In addition, the cloud allows you to get more out of your IT staff because it frees them up to work on business-oriented projects rather than managing systems. The Rackspace survey reported that 60 percent of respondents said the cloud has given their IT staff “more time to focus on strategy and innovation.”
2. Eliminate capital cost outlays associated with new systems: With the cloud, you don’t need to pay for the licensing of operating systems and application software. There is also no asset depreciation, meaning you don’t have to reinvest in new technology every few years. You always get the newest version of whatever technology is available without paying for upgrades. The cloud service provider will supply the latest upgrades to your systems as part of your contract.
3. Lower disaster recovery costs: Not only will disaster recovery be cheaper, but moving to the cloud also ensures you’ll have more advanced disaster recovery policies and procedures. The cloud service provider will undoubtedly have a very good disaster recovery and business continuity plan in place.
   This is an area where a lot of small and midsize companies fall short. They don’t truly understand disaster recovery and business continuity, so they don’t manage it well. Moving to the cloud removes that burden from businesses, allowing them to focus resources elsewhere.
4. Scalability: Distributors can use the cloud to scale up or down quickly. It allows you to take advantage of economies of scale. Since you only pay for what you use, you’re better able to manage the costs associated with adding or removing users. The Rackspace survey found that 49 percent of businesses used the cloud to grow their businesses.
5. Smaller upfront costs: The low upfront costs associated with cloud distribution software are a major selling point for distributors leery of investing a lot of money into new systems. Again, you pay for what you use with the cloud. That means if a business venture doesn’t work out, you can move on without having sunk millions of dollars into an on-premises system.
   Thanks to the cloud’s low cost, many new businesses are able to start what they otherwise would have struggled to launch, according to the Rackspace survey. Just over half of companies that started within the past three years said they could not afford on-premises IT when they wanted to launch. A whopping 90 percent of new businesses said the cloud made it easier to get started.

It’s clear that many companies are already using the cloud to cut costs, grow their businesses and drive innovation. It’s a low-risk investment with great potential for high rewards, which should make the decision to move to the cloud an easy one for distributors.