Yes, but it's not the only driver. There can be substantial cost benefits when leveraging cloud computing, but as we pointed out, your mileage may vary. You have to consider the cost holistically with other factors, including strategic benefits that are typically harder to define but there nonetheless.
It's easy to determine that cloud computing is less expensive than traditional on-premise computing by simply considering the operating expenses. The real benefit of cloud computing (or more specifically, SOA using cloud computing) is the less-than-obvious value it brings to an enterprise, including:
· The benefit of scaling.
· The benefit of agility.
The benefit of scaling means that cloud computing provides computing resources on-demand. As you need those resources, you simply contact your cloud computing provider and add more capacity by paying more money. You can do this in a very short period of time, typically less than a day, and thus avoid the latency, expense, and risk of going out to purchase hardware and software that takes up data center space, and the traditional time required to scale up an application in support of the business.
The use of cloud computing resources allows you to go the other direction as well. You can remove capacity, and thus expense, as needed to support the business. If the business contracts and the number of transactions are not what they used to be, you can reduce your costs by simply reducing the computing resources within the cloud computing providers. No need to turn off expensive servers, and have them idle.
The benefit of agility means that our SOA using cloud computing architecture can be easily changed to accommodate the needs of the business since it uses services that are configured via a configuration or process layer. For instance, if you add a new product line that needs specific processes altered to accommodate the manufacturing of that product, the sale of that product, and the transportation of that product, those processes are typically changeable by making a configuration change, and not by driving redevelopment from the back-end systems.
While this is a core benefit of SOA, in general, the use of cloud computing resources enhances agility since cloud resources are commissioned and decommissioned, as needed to support the architecture, and changes to the architecture. You can bind in logistics processes from an application-as-a-service provider that supports the movement of the new product from the factory to the customer. Since you leverage a pre-built service, out of the clouds, you don't have to suffer through the expense and cost of building that service from scratch.
Moreover, cloud computing does not provide a cost benefit in all cases. You have to closely look at each problem domain and business, and do an objective cost analysis to determine the true benefit. The tendency is to go with what seems trendy in the world of enterprise computing. While cloud computing may be of huge benefit to your enterprise IT, you have to consider all of the angles.