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The economic case for public cloud adoption: Evidence and insights

We are often asked about the cost effectiveness of public cloud adoption compared to on-premises hosting of infrastructure. Cloud adoption introduces significant changes to the way financial aspects of the IT service are managed.

The Cloud Centre of Excellence (CCoE) promotes a best practice approach and tools to optimise spending on cloud services through financial operations (FinOps). 

Below are some of the benefits of public cloud adoption. 

Preferential pricing – 2025 update

A government Memorandum of Understanding with a number of suppliers has been implemented to provide preferential cloud pricing for public sector organisations. 

Achieving savings through financial operations (FinOps)

Implementing new disciplines when running services in the cloud are essential. 

FinOps as a service

FinOps can be introduced to tackle cost visibility and control, with tooling and staff investment to support trusts and ICSs the benefits can include

  • idle resource reduction
  • accurate cost allocation and chargeback/show back
  • green FinOps for sustainability
  • automation and policy enforcement

Through proactive FinOps it’s possible to achieve consistent monthly savings across AWS and Azure platforms in the region of 35%, in addition to the preferential pricing discounts.

These savings stem from:

  • reserved instances and savings plans
  • intelligent tiering
  • backup and retention optimisation
  • pricing arrangements and negotiated discounts

Making the economic business case

The business case for cloud should not be a direct comparison of on premises costs to cloud costs. The considerations for agility and scaling, financial, operational, security, environmental, people also need to be considered

Compare the Total Economic Impact (TEI) and whole life costing of capital expenditure)  and operating expenditure).

The economic case for cloud adoption should incorporate:

  • avoided infrastructure refresh costs (hardware, data centre leases, disaster recovery estates)
  • reduction in support required from full time equivalent staff  and reduced contractor costs
  • sustainability savings (energy, cooling, estates rationalisation)
  • value of agility: faster time-to-innovate and reduced change lead times
  • emphasise the whole-life costing (10-year horizon) aligned to Green book guidance
  • be prepared to migrate as part of several business cases

Application portfolio rationalisation (workload readiness assessment) and software as a service first

Complete a workload readiness assessment as a structured pre-cloud exercise to right-size the application estate.

Have a SaaS-first policy and prrioritise SaaS where functionality is non-differentiating or commodity, to reduce technical debt, licensing sprawl, and infrastructure management costs.

Build a Cloud Readiness Heatmap scoring each application on technical fit, business criticality, data sensitivity, and contractual constraints.  

Digital workforce and cultural change costs

Highlight the risks of employing staff to legacy skills in a modern market focused on cloud.

Highlight the investment needed in upskilling, recruitment and new operating models (cloud engineers, cloud architects, FinOps analysts, product teams).

Build in a “cloud transition workforce plan” to the economic case with impact on existing infrastructure teams, reskilling pathways, and organisational design implications.

Security, resilience and compliance benefits

Quantify the economic impact of:

Show how risk reduction translates into avoided cost and reputational protection. 

Environmental sustainability and social value

Capture the carbon reduction benefits of hyperscale cloud (lower PUE, renewable energy) compared to local data centres.

Link to green FinOps and NHS net zero commitments explicitly call out in the economic case for alignment with organisational environmental, social, and governance strategies.

Last edited: 18 September 2025 11:51 am