Cost Savings as a Driver for Cloud Computing

There's been active discussion in the industry about whether cloud computing will benefit from the economic crisis or face challenges due to failures among its startup-heavy customer base. Network World has an IT profile of Preferred Hotel Group, which makes the case for cloud computing as a powerful cost management tool in a down economy.

Preferred, which runs a chain of luxury hotels, has shifted its modest data center operation to The Enterprise Cloud, the cloud computing platform from Terremark (TMRK). The Enterprise Cloud will provide Prefered with 10 virtual servers, including seven on full-time duty and three in reserve for demand spikes. Each comes with a preset quota of disk space, memory, compute power and bandwidth. The setup costs $16,000 a month.

"Everyone is checking their budgets now," said Chad Swartz, senior manager of IT operations for preferred. "If you go to the board, is it an easier sell to say we need to spend $200,000 in capital costs and $10,000 a month? Or just pay a $10,000 implementation cost and $16,000 per month? The cloud environment is going to explode, if just for the cost savings."