Wednesday, December 12, 2012
Consider Total Cost of Ownership with Cloud Deployments
What are the cost savings associated with a move to the cloud? Sometimes it is not the external costs (readily apparent in the contracts or service level agreements) that unbalance a cloud migration, but the internal costs one seeks to reduce. For example, a reduction in force clearly saves money. But divesting the organization of knowledgeable workers can have long-term detrimental effects. As total-cost-of-owbership includes all direct and indirect costs of owning a particular asset, labor associated with the asset might or might not be captured as a cost center. Further, making a decision to buy services on a pay-as-you-go basis as a capital expenditure, versus operational expenditure, is one way to amortize the use of cloud resources over in-house data center maintenance. Keeping computing off the balance sheet has pros and cons, of course, based on complex financial and strategic goals best managed by a company's board, or an institution's financial controllers, not the IT department. This article sums up a recent U.K. study. In it, we read that the study advises government agencies to ensure they are not locked into a relationship with a cloud vendor beyond the duration of the contract, and to look at any exit costs. If cloud vendors offer multi-tenanted infrastructure services, where clients co-locate their computing cloud with others, then there may be hidden costs, if arrangements change.