A business is contemplating the transition of their on-premises data processing facilities to a cloud service provider. Which advantage would this shift offer in terms of the company's financial investment in IT infrastructure?
Shifting to the vendor's infrastructure converts all costs associated with processing operations into fixed costs.
The predominant financial benefit comes from adopting a licensing model that is predicated on the number of users.
The business would benefit from reduced capital expenses due to a consumption-based billing approach.
Securing reserved instances for all compute instances is the primary method to attain cost reduction.
The main financial advantage is that the shift to a cloud service provider allows the business to reduce upfront capital expenditures on physical hardware since billing is based on the actual consumption of computing resources. This matches expenditures to usage and can result in significant cost savings, particularly in scenarios with fluctuating demand. Fixed costs would not offer the same economic flexibility and could lead to overprovisioning. Licensing models that are per user do not accurately represent the use-based cost savings of cloud services. While reserved instances can indeed provide cost discounts for certain use cases, they involve upfront payment or a commitment to a certain level of usage, hence they do not represent the same level of financial flexibility provided by on-demand, consumption-based pricing.
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AWS Cloud Practitioner CLF-C02
Cloud Concepts
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