Making The Business Case For Cloud

IT leaders need to fully understand costs and business need of the DIY model when considering cloud.

Tim Brophy

March 25, 2016

4 Min Read
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IT managers are often caught in a tough position when exploring cloud as a viable alternative to traditional infrastructure and application service methods. On one hand, it’s widely accepted that cloud services are a crucial enabler to being innovative, agile and cost efficient.

However, when comparing the cost of a cloud solution to providing the service in-house using existing resources or refreshing and extending the life of existing hardware, it may appear that a cloud solution doesn’t make financial sense. This dilemma is aggravated when private cloud is considered as very few providers can offer a pay-per-use commercial agreement for private cloud due to the investment required upfront.

This has certainly been the case in my enterprise client engagements with companies that are technically capable of running their infrastructure, possess the necessary capital budgets to procure hardware and have an overriding requirement to control their infrastructure from the ground up.

Yet it’s been proven many times over that a hybrid cloud solution is a viable alternative and worthy consideration for all IT leaders and even CFOs.

The cloud financial argument

From a purely financial standpoint, many decision makers are not entirely aware of the true cost of operating their environments. Specific expenses related to a facility and infrastructure often are buried in other budgets, so their view of operational cost is limited to staff, hardware purchases, maintenance agreements and software licensing.

Overlooked expenses often include the need to continually update engineer certifications, the impact of non-recoverable downtime, and the cost of capital that could be more efficiently used in generating income rather than financing non-core operational activities. Most TCO calculators from cloud providers bring the real costs to the forefront and are a reliable mechanism.

Evaluating business needs

Financial considerations aside, decision makers must focus on the business’s actual IT service requirements. Research shows that cost is seldom the primary driver toward cloud services. Instead, improved service levels, infrastructure agility and increased security ranks as the top three drivers, according to a recent survey from Saugatuck Technology. Overburdened infrastructure teams often cannot cope with the rate of change and demand, and desperately need to empower business units to provision their IT resources.

If the goal of a business is to move more quickly than their competition, the platforms on which they innovate and operate must keep up with these requirements. If they cannot, then irrespective of the cost of a cloud solution, they are simply not performing a business enablement role.

At the same time, not all applications have the same complexity and criticality profile. When they are run on in-house platforms, there often is no flexibility in the underlying infrastructure to tailor the availability and performance attributes by application importance and application owner budgets. In most cases the infrastructure is designed to address Tier 1 application requirements, and less critical applications waste resources designed for far more important workloads.

Hybrid cloud solutions have the ability to allocate different tiers of resources to applications when delivered across single and multi-tenant environments to ensure that the capability and cost of the operating platform matches the application profile.

Building a cloud is hard

Hybrid cloud is not simply infrastructure orchestration and management. It’s a combination of managed resources, ease-of-use, and security of a service level agreement (SLA) delivered as an end-to-end service whether on-premises or multi-tenant in a remote data center. A hybrid cloud offered by a service provider typically represents years and dollars of investment that cannot easily be replicated by an organization simply purchasing hardware and virtualizing it.

Many organizations simply cannot afford to invest the time, skills and technology to build a solution comparable to an already existing hybrid cloud platform unless it is explicitly their core focus. It’s not only the stand-up costs and development for orchestration that must be factored in, but the cost of constantly improving, maintaining and updating this software and hardware architecture to keep up with business demands and the infrastructure. To bring real cloud functionality to an organization by doing this themselves, IT teams  can expect to increase their operational costs significantly and divert a significant amount of attention and energy into operating this platform.

Piecing it all together

So the question of whether cloud is a viable alternative to the existing methods of IT infrastructure provision and operation is not a comparison of apples to apples. It isn’t even a comparison of apples to oranges as the differences are so vast. An organization needs to determine accurately what its objectives and goals are at a business level, understand whether they can afford to divert much-needed capital into a non-core activity such as operating IT infrastructure, and then consider whether a rapidly scalable, flexible and cost-efficient solution will serve their original goals more effectively.

There will be challenges along the way as they evaluate whether existing processes, policies and practices can support their adoption of cloud, but alignment with the right provider that’s able to offer flexible solutions and work closely with business owners will ease the transition.

About the Author(s)

Tim Brophy

Global Cloud Architect, Dimension Data

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