Calculating the ROI on Cloud: The Cost of Cloud – Part 3

Continued from Part 2

The Cost of Cloud

Clearly, there is great return potential associated with Cloud-based model. However, transition to Cloud-based model from an on-premise model is not without cost.

  • Direct Ongoing Cloud Costs

While the cost savings associated with a cloud-based model over an on-premises model are clearly substantial, there are two areas where an IT organization will face new costs associated with Cloud: those associated with the Cloud platform (~5%) and those associated with Cloud databases (~4%). However, these are operational expenditures – pay-as-you-go costs, that depend entirely on the business’ demand.

  • On-time Migration Costs

In addition to direct costs associated with transitioning to the cloud, migration to the cloud represents a considerable change to the way IT operates in both infrastructure and staff. In the short run, enterprises may experience disruption to business continuity and costs related to change management, integration, and incompatibilities among solutions.

  • Risk

Risk management can be a source of savings through Cloud; automation and standardization can reduce human error and additional layers of security can be more easily added in the Cloud. However there are risks associated with Cloud that an enterprise doesn’t face with the on-premises model.

  • Incompatibility/Uptime issues

  • Security/Compliance

  • Quantifying Risk

Conclusion

Organizations have traditionally seen the potential return from cloud investment as generated by cost savings: labor efficiencies, cost avoidance on the software side, and the savings that come from turning capital expenditures on hosting and hardware into pay-as-you-go operational expenditures. However, benefits from productivity improvements and revenue transformation opportunities are why the cloud is viewed as truly transformational.

In order for IT executives to ensure that they achieve ROI of Cloud in their organization, a thorough assessment of internal applications suitability for the cloud must be done. In addition, it is essential that the IT department works with the business side closely to determine what potential revenue opportunities are possible from moving to the cloud. It is only then that the true long term benefit of cloud can be realized.

Article By Shreekanth Joshi

Associate Vice President, Practice Head for SaaS and Cloud /Persistent Systems 

About CloudTweaks

Established in 2009, CloudTweaks is recognized as one of the leading authorities in connected technology information and services.

We embrace and instill thought leadership insights, relevant and timely news related stories, unbiased benchmark reporting as well as offer green/cleantech learning and consultive services around the world.

Our vision is to create awareness and to help find innovative ways to connect our planet in a positive eco-friendly manner.

In the meantime, you may connect with CloudTweaks by following and sharing our resources.

View All Articles

Sorry, comments are closed for this post.

Insider Threats and Sensitive Data in the Cloud

Insider Threats and Sensitive Data in the Cloud

The Age of Sensitive Data in the Cloud A recent survey report conducted by the Cloud Security Alliance (CSA) revealed that cloud security had reached a tipping point: 64.9% of respondents (which included IT security professionals from enterprises across all industries and regions) believed that the cloud was as secure or more secure than their…

Even Companies With A “Cloud First” Strategy Have Lingering Security Concerns

Even Companies With A “Cloud First” Strategy Have Lingering Security Concerns

Lingering Security Concerns Considering the cost and time-to-market advantages of SaaS applications in particular, it’s no surprise that companies are looking to the cloud to meet their business objectives. But what happens when a ‘cloud first’ company must also put security and compliance first? In a recent Bitglass survey report from a cloud access security…

Are Cloud Solutions Secure Enough Out-of-the-box?

Are Cloud Solutions Secure Enough Out-of-the-box?

Out-of-the-box Cloud Solutions Although people may argue that data is not safe in the Cloud because using cloud infrastructure requires trusting another party to look after mission critical data, cloud services actually are more secure than legacy systems. In fact, a recent study on the state of cloud security in the enterprise market revealed that…

Understanding Big Data – Are Big Data Analytics Your Friend or Enemy?

Understanding Big Data – Are Big Data Analytics Your Friend or Enemy?

Understanding Big Data The term “Big Data” is highly reminiscent of terms like “Big Pharma”, and it has a tendency to make consumers and professionals alike a bit nervous. However, whereas Big Pharma refers to large pharmaceuticals companies with market sway and seemingly countless political lobbyists, big data simply refers to the exponentially rapid growth…

Cloud Computing – A Requirement For Greater Innovation

Cloud Computing – A Requirement For Greater Innovation

Cloud Computing Innovation Sao Paulo, Brazil has had trouble with both energy and water supplies as of late. Despite it is the rainy period. Unfortunately Sao Paulo is very dependent on its rain as a majority of its power is generated from large dams. No water, no energy. Difficult situation for a city of some…

AWS re:Invent: Billions & Billions of Dollars

AWS re:Invent: Billions & Billions of Dollars

AWS re:Invent The massive AWS re:Invent show this week in Las Vegas is a celebration of cloud computing. What was formerly debatable is now inevitable: the world is moving to cloud. Amazon’s annual cloud revenues of about $7 billion, combined with an estimated $5 billion annual run rate by competitor Microsoft Azure, and the odd…

Cloud as Our Children’s Playground

Cloud as Our Children’s Playground

Cloud as Our Children’s Playground We read everyday about the fast pace of business adoption of the cloud.  But children are adopting the cloud at just as an aggressive pace.  The Cloud is changing our children’s lives – the way they play, learn, and interact with others and the world around them.  I see children…

CloudTweaks is recognized as one of the leading influencers in cloud computing, infosec, big data and the internet of things (IoT) information. Our goal is to continue to build our growing information portal by providing the best in-depth articles, interviews, event listings, whitepapers, infographics and much more.

Sponsor