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Moving to the cloud can be more costly than once thought

By Shannon Williams
Wed 20 Jul 2016
FYI, this story is more than a year old

Australian business looking at their cloud options are being advised to learn about the total costs involved, before diving straight in

While many businesses believe the cloud can provide cheaper IT operations, actual costs can be similar to those of on-premise IT infrastructure, and sometimes even more. 

That’s according to CenturlyLink, who says much of the cost derives from moving to and operating a business’ IT in the cloud, not just the cost of the cloud services.

Stuart Mills, regional sales director, ANZ, CenturyLink, says businesses must ensure they are moving the right workloads to the cloud, or risk wasting a fortune in both time and money.

“Australia has passed through the early adoption wave of cloud. We are now seeing a number of organisations trying to back out of their cloud choice, due to unforeseen high costs, an inability to move workloads into other formats, and a desire to work with more than one cloud partner,” he explains. 

“For organisations to understand the financial impact of cloud, prior to adoption, they must understand the total cost of cloud ownership, or TCCO, which is calculated based on each organisation’s individual circumstances,” Says Mills. TCCO includes the combined cost of: actual cloud resources consumed; moving the organisation’s IT to the cloud; operating the cloud; unforeseen additional fees; managing multiple vendors; and the cost of managing risk associated with cloud transitions and maintenance.   

Mills says organisations should work with their cloud or service provider to assess the following factors and choose the most appropriate cloud solution that meets their needs: 

  • The organisation’s starting position: Is the organisation moving from an established, optimised, in-house platform, or is it starting a new application or project? 
  •  The organisation’s current platform: Is the organisation moving to a cloud that has the same operating platform, or one that requires applications and software to be re-written to make the move a success? 
  • The specific workloads being moved to the cloud: Is the organisation aware of which workloads will generate a higher performance/price return in the cloud, compared to keeping the workloads in-house or in another managed IT form? 
  • Staff skillsets for the cloud transition: If employees are not already skilled in the new cloud platform, including processes and security protection, has the organisation considered the cost of training or recruitment? Similarly, has the business considered productivity time that could be lost due to the migration to a new operating environment? 
  • Management of cloud consumption: Has the organisation considered who will manage its cloud consumption? How will budgets be set and enforced? And how will the organisation report on cloud costs for chargeback purposes? 
  • Moving workloads to and from the cloud: Does the organisation intend to be able to move workloads back out of the cloud, on a fluid basis, to integrate with the existing IT environment? 
  • Required modifications to IT governance: What modifications are required for internal IT support processes, helpdesk, cost management and approvals, security policies, and risk management procedures to deal with the new source of IT resources? 

“Considering each of these factors will often result in a different TCCO, even for organisations with similar needs. With a choice of four global public clouds now available in Australia, including the recently announced CenturyLink Cloud, the right cloud choice may not be the one initially expected,” says Mills.

“Organisations should work through these factors with their cloud vendor(s) or service provider to ensure they are getting the best cloud solution for their needs,” he adds. “It is important for organisations to consider their TCCO to ensure the move to the public cloud actually delivers a positive performance and price outcome,” Mills says.

“It can also prevent the organisation from making costly mistakes which can be difficult to unwind.” 

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