Teaching today relies a great deal on IT resources which require large investments and there are many higher institutions that cannot afford such investments. Educational institutions usually search for opportunities to better manage their resources, especially after the economic crisis, which has resulted in reducing government support, especially in western countries. It is argued that ‘cloud computing’ is one of those opportunities for any educational institution due to its benefits in terms of cost reduction. Today, ‘cloud computing’ can be seen as one of the latest dynamic services in the IT world because of its flexibility. This paper investigates the financial incentives for adopting cloud computing in higher educational institutions. To achieve this objective the research employs a qualitative method to collect the data. Interviews were conducted with a number of cloud service providers, experts in the field and users/potential users of the cloud. The results reveal that cloud computing drives down up-front and on-going costs, and that the number of IT staff can be reduced if the cloud is adopted. Disaster recovery and business continuity are other cost-savings areas for an educational institute in adopting the cloud, and cloud computing provides low cost testing and a development environment solution.