Cloud Computing and SOA Convergence in Your Enterprise: A Step ...

64 Chapter 4 Making the Business Case for Clouds
On-Premise
Cloud Computing
$500,000
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Year
1
Year
2
Year
3
Year
4
Year
5
Figure 4.1
Comparing the cost of on-premise and cloud computing applications.
IT Costs Are Always Complex
As you go through this chapter, keep in mind that simple cost models for IT
operations rarely represent real life. You have to consider all costs holistically,
including hard costs such as the cost of acquisition and operations as well as
the harder-to-determine costs. For example, what to do with the existing hardware
and software you have already paid for, and the data center space you
have already leased—that’s a cost. The risks around leveraging a platform you
do not own—that’s a cost. The risk that prices on cloud computing services
could go up in the future—that’s a cost. You get the idea.
Also, you have to consider the soft or hidden costs such as the strategic
value of bringing an application to market quicker by leveraging a cloud computing
solution versus an on-premise solution. There could be a huge business
benefit in market timing. You must also consider the ability to service your
customers and partners better using cloud computing–based systems than you
can using on-premise systems.
The point is that simple cost models can make a strong case for moving to
cloud computing or leveraging on-premise systems, but they often do not
include the majority of costs and benefits you need to consider. Creating an
accurate business case means understanding and modeling many elements,
some easy to determine and some more difficult. The cost model will be complex,
but it needs to be complex to be useful.