3 C’s of Cloud Adoption – Cost

August 23, 2012 - 0 Comments

In my previous blogs confine and clover, I spoke about determining the scope of your business problems as well as defining your measures of success when planning a Cloud solution. Now, I would like to help you understand both the cost you will incur for the work necessary to achieve your defined cloud goals and how to avoid unexpected fees.

Because of all the hype around Cloud, we hear (sometimes disproportionately) about how Cloud can transform your business. However, the cost of that transformation is often not fully understood. Careful planning and awareness can save you money along the Cloud journey. Be aware of and consider the following hidden costs:

Software-as-a-Service (SaaS) providers often bundle their services by numbers of users: 50, 100, or X. If you are not rolling out your Cloud project with the same number of users in the bundle, you could end up paying more than you initially anticipated. In addition, SaaS providers often require separate training classes that cost up to $3,000 per user. These classes are important as they enable you to maximize the value of the offered software. It is smart to factor in these costs in your initial planning.

Infrastructure-as-a-Service (IaaS) providers often charges for CPU and RAM that you may or may not be able to use full capacity or monitor availability unless you purchase and deploy appropriate monitoring tools. On top of that, some cloud providers charge separately for database usage, bandwidth usage and keeping the images of your “not running” servers. However, if this wasn’t included in your initial plan to monitor availability of infrastructure, bandwidth usage and charges incurred to regularly adjust what you purchase and maximize the value, you could end up paying significant additional fees.

The majority of the time, costly integration is a necessary part of cloud implementation. For example, your sales force may require some level of integration with customers’ backend identities, databases, processes, etc. This comes with a cost that is often high enough that you may need to use third-party upload integration vendors from the service providers.

When planning, keep in mind the resource costs for people to support internal and process changes. For activities such as help desk services you may need to upgrade your contact center processes and responses and train users so they can respond appropriately. With any service you buy, there is always a business end-user implied, thus reporting must be done on the usage. This expense is usually not included as a default nor talked about in the initial planning.

Very importantly, public cloud services can be purchased by anyone with a credit card, and many a time, enterprises find that different departments are going out and purchasing various cloud services for their project initiatives and not able to take advantage of “bulk or bundled” pricing if it is done centrally. Such behavior leads to additional cost considerations. 

Assessment of regulatory and compliance needs can introduce further cost. For example, the some European countries would not allow companies to take data outside of the country. Similarly some countries have rule against backing up individual data outside of the country. When you implement a cloud solution, you need to perform the appropriate level of regulatory assessment or you will incur costs for going out of compliance. Similar to regulatory and compliance needs, one need to plan the budget to facilitate evaluation of cloud impact to all service level agreements with customers, suppliers, partners and vendors.

Last, but not least, there are several cost considerations involving changes to a company’s infrastructure. The network infrastructure must be appropriately scaled; network upgrades will make sure that application performance can be achieved consistently over time. There is, however, an additional cost for securing your data and cost for regular audit to understand ongoing security threats.

When you take these costs into consideration you will be financially prepared to realize the full benefits of Cloud and achieve success. As always, the first “confined” step is  to develop inventory of cloud usage across the company.

With this costs consideration, I complete my series of 3 C’s of Cloud adoption – confine, clover, and cost. Next month, I will introduce 3 A’s of automation using cloud. More Information on:

How Cisco can help you enable cloud services

How Cisco can help you build IaaS clouds


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