How Does Cloud Technology Reduce TCO?

As it pertains to technology, TCO, or total cost of ownership, is a calculation that helps businesses determine the cost to assess, purchase, own, and maintain technology in their business. You may have heard, in passing, that a Hosted Services solution can help your organization reduce TCO with:

  • The elimination of capital costs
  • Faster deployment and increase employee productivity
  • Flexibility for a mobile workforce
  • Reduced risk with backup services
  • Decrease overall downtime and improve productivity

Elements of Total Cost of Ownership and Their Relation to the Cloud

Every business wants to grow, innovate, and serve their customers more efficiently, and even if they have only the barest understanding of cloud, they’ve heard that cloud computing technology can give them the power to achieve these goals. Today, business owners have more options than ever for cloud technology. In the end, many make their decision based on which option will result in the lowest TCO for the highest ROI.

Let’s look at the following components of total cost of ownership.


One of the first expenses related to total cost of ownership is the direct and indirect cost of assessing which cloud service will be right for the business. In between free program trials, interviewing hosted service providers, and other measures, making this decision can be a little complicated, sometimes expensive.


Cloud breaches and leaks of private data have been a part of the news for the past year. Unfortunately, strong evidence suggests that this trend will inevitably continue. Having your cloud data hacked is costly, financially and socially.

Data backup

If the server for a cloud provider crashes, will your data be safe? Will your business still be able to function and serve your customers? Or will your business have to just take the loss? Your total cost of ownership calculation should include the long-term risks and benefits of cloud data backup.


Pricing, understandably, is one of the highest concerns in the total cost of ownership calculation. Pricing for cloud services varies. Some providers charge monthly or yearly, with additional costs for add-ons and usage. Similarly, some Hosted Services providers charge based on usage and bandwidth, leading to inconsistent monthly statements. In the end, the smartest way to reduce TCO is to find a provider that offers the highest value at a consistent price.


One of the most significant benefits to cloud computing technology is offloading the cost of maintaining onsite servers. When businesses leverage the cloud, they can reduce TCO by cutting the costs of hiring on-site technical professionals, as well as the general cost to upkeep the servers and the space that houses them.


If a business doesn’t have the resources to customize business applications in-house, they can leverage the cloud to help them. However, the level of customization depends on the type of cloud technology they choose.

In Favor of Hosted Services for Businesses of All Sizes to Reduce TCO

Hosted Services is a branch of cloud computing technology that offers a business their own customized and secure virtual infrastructure, also known as Infrastructure-as-a-Service, or IaaS. Hosted Services offer answers to each TCO concern discussed above.

  1. Assessment: The right hosted service provider will provide cloud capabilities with an SLA (service level agreement) of 95% or higher.
  2. Security: A Hosted Services provider uses several layers of enterprise-class security measures to keep their client’s data safe.
  3. Data backup: Data created on a hosted server is automatically backed-up, and the client is guaranteed access to their data whenever they need it.
  4. Pricing: The right Hosted Services plan won’t be the cheapest on the market. Instead, it will offer the highest value for the highest quality product at a consistent monthly rate.
  5. Maintenance: The provider is responsible for all maintenance on the hosted server, completely offloading the burden of maintenance from the clients.
  6. Customization: Sign up for as little or much hosted capacity and capabilities as you need. The right Hosted Services provider will work with you to develop a hosted package that suits the needs of your business.

This discussion of Hosted Services don’t even discuss its other benefits, such as the high reliability of virtualization and converged infrastructure.


Hosted Services can reduce TCO for businesses of all sizes. The cost of servers, maintenance, innovations, and upgrades are spread through a multitenant hosted infrastructure, allowing the hosted provider to offer enterprise class services to every client. Find out today how Hosted Services from Centre Technologies can help your business reduce TCO. Contact us directly today.

Originally published on January 5, 2015

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About the Author

Centre Technologies Centre Technologies

Centre Technologies is a full-service IT consulting and managed services provider headquartered in Texas, with a focus on mid-sized businesses. As a trusted IT partner for well over a decade, Centre is recognized for its local experience and enterprise-grade cloud and cybersecurity solutions. Centre is committed to helping organizations harness the power of technology to maximize their operational efficiency and exceed their business goals. Learn more about Centre Technologies »

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