When we meet with companies to discuss the value of migrating from traditional on-premises IT to cloud infrastructure, business stakeholders and financial teams are often skeptical. Historically, these stakeholders have viewed the IT budgets and project plans in terms of previous budgets and transactions.
When companies previously bought hardware, software and implementation services, the shopping list was simple:
- Capital equipment – software and licensing, often over-purchased to allow for multi-year usage and to reduce trips to the budget committee
- Maintenance fees – Term-based hardware and software protection on the capital equipment
- Implementation and project fees – The costs to install, upgrade, or integrate the capital equipment purchases
- IT staff — It was assumed that internal IT staff would provide the labor for ongoing care and feeding of the hardware and software stack, along with oversight on the maintenance contracts and projects. This was often left out of the budget because it was considered a sunk cost.
Today, the best cloud infrastructure services are a conglomeration of:
- Capital equipment spend replacement, with hardware maintenance built in to the pricing in a buy-what-you-need and pay-as-you-grow model
- Ongoing software licensing and maintenance
- Significant IT staff tactical workload reduction – The cloud provider frees up IT staff from performing hardware maintenance and upgrades, operating systems upgrades, problem research and shopping for the next big thing. This reclaimed time frees up IT to focus on innovation, or it can solve staff hiring and retention problems.
- Enterprise-grade risk management – Includes high availability facilities, equipment, security and compliance with explicit service level agreements. Often the risk management with cloud infrastructure is a significant improvement from previous on-premise solutions.
- Connectivity – A few cloud providers offer Internet, wide area network connectivity, and direct connectivity to colocation and other cloud providers including AWS and Azure.
- Technical expertise – The best cloud providers have hundreds of experts available to support your IT strategy and meet your hardware, software licensing, operating system, data protection, and disaster recovery requirements.
This radical simplification of multiple business value points into a single set of services doesn’t always fit well into the old model of how stakeholders previously purchased IT. Often, the stakeholders revert to the least common denominator of comparison, which is price.
A great way to bridge this understanding gap is to build a cost comparison that includes all the key value points above. The cost comparison may be complex, but it can help clarify the stakeholders’ understanding of cloud infrastructure as a sensible cost alternative. The cost comparison can also illuminate how cloud infrastructure can solve more difficult IT problems like staff retention and the elimination of thousands of staff hours spent on low-return IT projects.
Need help building a cost comparison on cloud infrastructure versus the old way? Contact me.