IT is a strategic differentiator. Often it is a single force that determines the speed and agility of an organization. Businesses live and die on hard numbers. According to the Gartner Report Three Moves for CIOs to Lower Business Costs with Cloud, organizations list agility, innovation, and lower costs as the top three reasons for adopting the cloud.

 

A move to cloud storage should be evaluated not only on capital infrastructure savings, but also on operational-cost benefits such as enhanced developer productivity and faster time to market. Proponents of cloud storage must compare the benefits of cloud against realistic cost expectations—both hard and soft costs. Cloud can indeed yield significant cost savings, and assigning value to speed and agility is critical to the cloud business case.

 

So, how can you measure your TCO with cloud? Here are four ways to assess the benefits of moving into a cloud environment.

1. Capital Expenditure Reduction

When you evaluate the cost benefits of a cloud environment, consider the reduction in capital expenditure for your organization. Does cloud reduce your server or network infrastructure costs? What are your costs for reserved use versus on-demand use? For a cloud environment, you can calculate capital expenditure reduction by using the following factors:

  • Compute: $/instance/month
  • Storage: $/GB/month
  • Reserved-use versus on-demand-use costs
  • Cloud provider support costs

Most cloud solutions offer extensive storage capabilities with unlimited storage space. So, as your storage needs increase, you can increase your cloud without additional capital expenditure (capex). By using capital expenditure reduction as a cost measurement, your organization can directly compare cloud with the expense of additional on-premises systems.

2. Operating Expense Efficiency

Even if cloud helps your organization significantly reduce capital expenses, you need to know that your cloud environment operates efficiently. What are your hardware and software maintenance costs? Do you enhance FTE productivity through automation? You can measure the operating expense efficiency of cloud by using the following metrics:

  • FTE hours that are required to provision, patch, and update infrastructure
  • FTE hours that are required to diagnose and troubleshoot performance issues
  • Service costs, including hardware and software maintenance
  • Ratio of virtual servers to administrators

In a cloud environment, your organization saves on power and facility costs, maintenance costs, and often FTE headcount or hours. By calculating your operating expense efficiency, you can measure your ongoing cloud savings, not just your initial capex.

3. Application Delivery Improvement

After you have calculated your capex reduction and your increased efficiency, how do you measure delivery improvements within a cloud environment? By calculating the improvement of application delivery, you can understand how a cloud environment continues to reduce costs, to shorten release cycles, to increase accuracy, and to boost time to market. Consider the following costs when you measure your application delivery improvement:

  • Application release and integration process reengineering costs
  • Tool development, test, and release integration costs
  • Application architecture redesign costs
  • Developer and operations staff training costs

A cloud environment can help your enterprise streamline release processes, reduce errors, and ultimately improve application quality. When you calculate your organization’s application delivery improvement, you determine many different elements that contribute to a reduced TCO with a cloud environment.

4. Facility Consolidation Gains

One of the major reasons to move to a cloud environment in the first place is the expected facility consolidation gain. When you no longer store your data on the premises, you reduce the cost of maintaining that infrastructure, and you also consolidate costs for your remaining on-premises setup. When you calculate facility consolidation gains, consider the following:

  • Facility offload costs (retirement and closure costs)
  • Chargeback of remaining costs by backup or application
  • Retention costs for the on-premises infrastructure that is required for security or compliance reasons

With cloud, your TCO reflects reduced facility costs and increased technology asset usage. Ultimately, your organization has faster access to a newer or improved infrastructure, with no up-front cost. Cloud reduces costs not only through increased efficiency in the new environment, but also through increased efficiency in your existing, consolidated facilities.

Are You Considering Moving to the Cloud?

NetApp® hybrid cloud services enable you to put your data-centric vision into practice so that you can respond faster to market changes and can rapidly advance new ideas from concept to production. We can help you transform your data into a strategic asset so that you can advance your business and change the world with data. To learn more about how you can unleash the power of a hybrid cloud, visit netapp.com/hybridcloud.

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Michael Grant

Michael is a marketer by profession, technologist by accident and endlessly curious by nature. He has been obsessed with the intersection of business and technology for well over two decades. When at home in Austin TX, his wife and their six daughters have learned to cheerfully tolerate his disruptive carpentry and gardening projects.