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CDP: Cloud Computing Can Save $12bn

Cloud computing has the potential to save large U.S. companies up to $12.3 billion a year and to prevent 85.7 million metric tons of annual carbon emissions by 2020, according to a report by the Carbon Disclosure Project.

According to the report, Cloud Computing: The IT Solution for the 21st Century, cloud computing can also achieve significant non-monetary benefits, such as business process efficiency and increased organizational flexibility. The report, conducted by independent analyst research firm Verdantix and sponsored by AT&T, analyzes the potential impact of cloud computing at firms with revenues of more than $1 billion.

For the report, Verdantix conducted in-depth interviews with 11 multi-national firms – including Aviva, Boeing, Citigroup and Juniper Networks – in diverse sectors. All study participants had adopted cloud services for at least two years. Verdantix also interviewed experts from three cloud computing providers; and performed financial, economic and carbon reduction modelling.

Verdantix found that companies plan to accelerate their adoption of cloud computing from 10 percent to 69 percent of their information technology spend by 2020. Many of the firms interviewed reported cost savings as a primary motivator, with anticipated cost reductions as high as 40 to 50 percent.

According to the report, benefits of the switch to cloud computing include:

  • Helping users avoid costly up-front capital investments in infrastructure
  • Improving time-to-market, as a new server can be created or brought online in minutes
  • Providing greater flexibility, as clouds allow firms to pay for excess capacity only when they need it
  • Avoiding the continual maintenance of excess capacity needed to handle spikes
  • Improving automation that helps drive process efficiencies

“Carbon reduction is one driver, but not the primary driver,” said Paul Stemmler of Citigroup. “The primary driver is time to market.  Developers used to take 45 days to get new servers, but in the internal cloud infrastructure that we operate in our own private network, it takes just a couple of minutes.” 

According to Verdantix senior manager Stuart Neumann, the study also analyzed the impacts of transferring human resources to the cloud, and found that such investments could give a payback in under one year.

“A large percentage of global GDP is reliant on ICT – this is a critical issue as we strive to decouple economic growth from emissions growth,” said CDP executive chairman Paul Dickinson. “The carbon emissions-reducing potential of cloud computing is a thrilling breakthrough, allowing companies to maximize performance, drive down costs, reduce inefficiency and minimize energy use – and therefore carbon emissions – all at the same time.”

This study follows the release of CDP’s recent paper, “Building a 21st Century Communications Economy.”

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