In this video, learn how to create a business case for cloud computing.
we're basically understanding total cost of ownership. So the real world advice that I have would be almost all organizations ask for total costs of ownership and return on investment, TCO and ROI, and it's absolutely imperative we're able to understand that as Cloud-based professionals needs to exist before the migration can begin, and ultimately, this is about you creating the business case. This doesn't mean, by the way, that we have to have MBAs or be business geniuses. This just means we have to understand how to add, subtract, multiply, and divide, able to determine the business case to understand how the technology's going to be applied. So this is the value metrics by which you'll be measured against. Keep in mind as you provide leadership with key metrics, such as total cost of ownership and return on investment, that you're going to see those again. So if you're promising, say, a 50% return on investment in the first two years of utilization of Cloud computing, chances are that's going to pop up somewhere in your future, and you need to be able to answer for those. So, total cost of ownership or return of investment, we need to do the cost calculations pure TCO, total cost of ownership. In other words, what it's going to cost us to run this thing first year, second year, third year, five years down the line? And what are the metrics as to total cost of ownership for applications, for databases, for Cloud instances? How does that differ from total cost of ownership now, with their traditional on-premise systems as move into the Cloud. We have to figure out transitional cost. In other words, what it costs to get us from the existing traditional systems on premise into the public Cloud-based system. And that's going to be critical, because they're going to look for those costs to be recuperated over time. So in other words, there has to be a business reason for moving into the Cloud, and ultimately, they're going to look for that money to come back over a period of time. Is it going to be one year, two years, five years, 10 years, maybe never? And then finally, full program costs versus value calculations have to be there. So once we figure out what it's going to cost us to move to the Cloud, and we understand the operational costs, we understand the migration cost, we understand the refactoring cost, we understand the changes of security that needs to be made, changes of governance that need to be made, performance management and operations, the list goes on. Ultimately, this is about you looking at what the costs are versus your value metrics, or what you consider to be the value points that need to be determined, including agility, compressed time to market, you know, cost savings, things like that. That all goes to the reasons that we move to the Cloud. And then from that, you're able to produce a set of metrics, or a set of predictions as to what value is going to come back to you, to the business from the use of Cloud. So value realization, you got a couple of things to consider, and this is just an example. You know, we may have improved agility, while in some cases, if you're a tire manufacturer in the Midwest, your ability to do things faster or to change faster may not have the same value as if you're a bank in New York, and so we weight it accordingly. And say this one is 92 out of 100, And the ability for a manufacturing company who does custom fabrication, for example, to automate a Cloud business process which allows customers to, in essence design their own fabrication online, and have the thing directly shipped to the fabricators which are able to automate the production of whatever they're looking to fabricate, and there's the ability to, in essence, remove some of the steps that business has to undergo to get to a revenue-generating event, and ultimately, that's what Cloud computing provides. And finally, your ability to decrease costs. In other words, ultimately, is cost really a big issue for you? You'll find that in the financial industry or other industries that have access to a great deal of resources, cost isn't really as much of an imperative as somebody that may be in the retail space, for example, where cost goes to how much margins they're able to charge, ultimately goes to the success of the business. Make sure you do a couple of things. Number one, current state assessment, where you are now. Future state architecture, where you're looking to go and estimates in terms of how those architectures are going to change the cost model. That leads you to the total cost of ownership model, or how much is it going to cost you going forward, and then finally, the business benefits, ROI. Your ability to, in essence, assign different ROI characteristics and understand the weight that you're putting toward those characteristics in terms of expectations, as well as the reality behind the business. So, current state assessment, we do application inventory estate-level assessment in terms of what the existing as-is state is doing, sample application assessment, full estate inventory, in other words, what's happening within the enterprise currently. Application migration approach we're going to leverage. Next, we get into service levels and operational environment assets. Current infrastructure and operational costs, current state architecture qualities and requirements, availability, security, compliance, scale, performance, resiliency, and current state operational model and processes. So the top five TCO/ROI overlooked areas you need to consider as well. In other words, areas where people who are Cloud professionals may go wrong. First, is the value of agility. We often get that wrong, because it's very difficult to determine what the value of agility really is within a particular business. I can tell you that it's typically undervalued. In other words, people don't consider agility as much of a valuable asset than it is, even if you're a manufacturing company that hasn't changed a lot in the last, you know, 50 years, you may find that having the ability to change will enhance the business. Cost to retire selected applications, infrastructure, or data centers. People don't understand what are the tax issues around retiring, or putting an application away, or basically stop using hardware? We may be depreciating existing on-premises hardware systems in such a way that actually moving to the Cloud, even though it may be better for the business in other ways, may cost us a great deal in the sacrifice in terms of the tax benefits that we're going to see. Changes required to maintain service levels. In other words, what you have to do to, in essence, get up to the service levels that we need to provide in the Cloud, and what changes need to occur to get there. Software costs, how much the software is actually going to cost, both on-premises as we change things, but also considering moving to the Cloud. How much is the software going to cost, say, running Oracle on-premises versus running Oracle on Amazon Web Services, for example. And then organization transformation costs. In other words, what it's going to cost to change the personnel, what it's going to cost to change the organization, change the structure, change locations as to where people are going to be. All these sorts of things are typically missed as we migrate into the Cloud. So, these often overlooked, but it doesn't have to be overlooked by you.
- Types of clouds: SaaS, IaaS, and PaaS
- Identifying the data and applications to move to the cloud
- Migration planning
- Selecting a cloud provider
- Cloud security
- Cloud operations
- Approaching management and monitoring