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Rackspace Survey: The Cloud Helps US Businesses Boost Profits

‘Cloud computing is heralded as a boon for US startups at a time when the country needs it’

Cloud computing allows US businesses to reduce their total IT costs by a significant 26 percent, according to a new study released on Wednesday. In addition, a majority 62 percent of respondents agree cloud computing has helped them boost profits.

"Businesses of all sizes, from the very largest global corporations to startups, say their operations are seeing multiple benefits from cloud computing," noted Rackspace Chief Technology Officer, John Engates. "Thanks to the cloud, at least half of businesses on both sides of ‘the pond' are growing with increased profits despite the ongoing economic backdrop. Savings from the cloud have enabled these companies to hire new employees, increase wages and drive innovation."

The study, conducted by Rackspace Hosting with support from Manchester Business School, a UK and world business school, found an overwhelming 94 percent of businesses in the US using the cloud had saved money.

Reinvesting savings back into the business
Importantly, the majority (68 percent) of US firms are reinvesting the money saved through cloud computing back into the business. One priority for reinvesting this cash is improving and expanding product and service innovation (stated by 52 percent); however, nearly half (62 percent) of respondents also reinvested money into increasing headcount or boosting wages and bonuses. The survey points to a resulting increase in employment of 28 percent as a result of cash saved from cloud computing.

Boost to profits
Savings weren't the only thing identified by the survey. Nearly half of US businesses (62 percent) agreed cloud computing has directly helped to boost profits. In addition, 58 percent stated that cloud computing has been a key factor in enabling their company to grow its business.

Benefits for start-ups
The study also pointed to cloud benefits for startup businesses. By a large majority, 92 percent of businesses that have started in the last three years say the cloud has made it easier to set up their business. Furthermore, over half of the startups surveyed (52 percent) said they wouldn't have been able to afford on-premise IT resources at the time they wanted to launch. This was explained by Garry Prior, Co-founder of startup Taxi for Two, "Without the ability to run our infrastructure on the cloud, we simply couldn't afford to set up business."

Open standards an increasing factor
The US is leading the way in open cloud standards with 70 percent adoption, with 74 percent of US organizations saying cloud standards are increasing. A majority (90 percent) say open standards boost their ability to innovate.

Brian Nicholson at Manchester Business School notes: "Cloud computing is heralded as a boon for US startups at a time when the country needs it. By making high end computing resources available on flexible payment terms with the push of a button, we are significantly reducing the level of investment required to set up shop. It has arguably never been easier to start a business and much of that is the result of the flexibility cloud computing allows."

More Stories By Elizabeth White

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