Cloud Computing Won't Boost Productivity Much, Study Suggests

Cloud computing represents part of the next great wave of computing architecture, many would argue. But the big benefits likely will come in the area of computing costs, rather than productivity gains for small and large businesses.

According to a study by U.K. Department for Business, Innovation and Skills, the productivity of SMEs is, in general, approximately five percent less than large enterprises. That likely is less than many believe. One way of looking at matters is that if cloud computing can completely erase the gap between the most-efficient enterprises, the gain is just five percent. 

The bad news is that cloud computing is not going to yield much, in terms of growing small business productivity, according to an analysis by the Centre for Economics and Business Research. 

In a recent study of cloud computing impact, the CEBR found "the largest potential benefits of IT scalability to large enterprises occur in the transport and communications industry sector." 

In some industry segments, though, the CEBR found zero impact on productivity, based on adoptio of cloud computing. In the U.K.’s production industries, especially the manufacturing and energy sectors, CEBR found no productivity improvements or a trend decline in productivity over the period from 1997 to 2007. 

These sectors were, consequently, assumed to have nothing to gain from IT scalability, as far as productivity gains, CEBR says. That is not to say there is no measurable impact, simply that the impact occurs in the cost of conducting computing operations, not productivity gains. 

CEBR estimates capital expenditure cost savings available from private cloud adoption will include an overall 20-percent reduction in the costs of external IT services, as well as a two-percent reduction in software maintenance costs.

An overall reduction of 18 percent reduction in server and storage costs also can be expected. In addition, adopters could see a 44 percent reduction in network hardware costs. 

Weighting those cost drivers, CEBR suggests cloud computing adopters could save about 17.3 percent of total IT capital expenditure budgets in a private cloud computing environment. In a hybrid environment, savings might reach 31 percent of total IT capital expenditure.

In a public cloud environment savings could reach 40 percent of total IT capital expenditure budgets. 

Cloud computing, at least in this analysis, does not seem to have much impact, if any, on productivity. Cloud computing can lead to significantly lower IT spending, though.