#4 – Know Your Cloud Economics
Understanding the economics of cloud adoption seems like a no-brainer best practice.
However, our experience shows that more than 50% of enterprises do not take the time
required to determine the business case for moving to the cloud, probably because they
“already know” it is a good thing. Nevertheless, an organization gains many valuable
insights by building a business case, and improving their understanding of cloud
economics.
Building a Business Case for Cloud
Cloud economics fall into two separate, and highly valuable, buckets. The first is a
straight-line total cost of ownership (TCO) analysis, along with hard cost savings. TCO
compares the like-for-like replacement of on-premises services with cloud services.
When determining your current costs, we suggest you look at the whole package, not
just server-for-server comparisons. Areas to consider include:
• Hardware and networking costs • Requirements analysis costs
• Downtime costs (planned and • Developer, administration and end-
unplanned)
user training costs
• Upgrade costs • Cost of integration with other systems
• Disaster Recovery / Business Continu- • Quality, user acceptance and other
ity costs
• Service Level Agreement penalties
• Deployment costs
• Operational support costs (day-to-day
operations)
testing costs
• Application enhancement and “bug
fix” costs
• Physical security costs
• Legal, MSA and contracting costs
• Performance costs • Replacement and takeout costs
• Costs of selecting vendor software • Cost of other risks (including security
breaches)
The second bucket of cloud economics includes agility and other soft costs. What is the
benefit of having cloud native, highly flexible and agile infrastructure? What is the finan-
cial impact of decreasing provisioning times from months to hours? Quantifying these
intangible cloud benefits for an enterprise can be difficult. Consider these questions:
• How do you measure the impact of productivity (in person-days)?
• What is the total benefit of accelerated application development?
• How do you measure the impact of faster software lifecycles?
• How do you measure a fail-fast model?
• How much do human error and outages cost your organization?
Getting to solid answers around these topics is challenging; however, many companies
have been able to determine tangible benefits. For example, a financial services com-
pany saw a 10% productivity gain in their software development after moving to AWS.
50 | THE DOPPLER |
SUMMER 2019