Friday, 29 October 2021

CLOUD ECONOMICS: UNDERSTANDING THE TRUE COST OF CLOUD COMPUTING

As you begin your journey towards digital transformation and cloud adoption, you will face some major financial decisions to make: cloud economics.

Depending on your business needs, the cost of cloud adoption comes with variable options that fit all sorts of budgets and cloud computing needs. Which is why it is important to thoroughly analyse and ensure your spending is being placed where it matters without compromising on critical features.

 

The Basics of Cloud Economics

The goal of cloud economics is to provide the answer to key financial questions your business may have regarding cloud adoption based on what it wants out of it. Mainly you will be looking into two areas of concern: the return of investment (ROI) and total cost of ownership (TCO) over a period of time.

The journey should then start by factoring in the following:

  • Benchmarking

    Calculate the cost of operating your current IT infrastructure. This also includes the cost of equipment lifespan, labour, software licenses & upgrades, maintenance and operational costs, and hardware spare parts.

  • Migration costs

    Determine the cost to migrate IT operations to the cloud or to switch cloud providers if this applies to your business. These costs should already include labour and expenses to integrate and test applications, as well as any training required.

  • Cloud costs

    Estimate the capital expenditure and operational costs of the cloud infrastructure, platforms and solutions you will be considering, be it public, private or multi cloud. Get quotes from the cloud service providers (CSPs), perform a cost comparison between vendors, and be sure to also consider retention fees to cover ongoing integration and testing of apps, as well as data security, recovery and compliance.

 

 

Deciding on Your Cloud Options and Needs

To start on your journey to properly calculate the cost of the cloud configurations and services you require, it's important to know your needs as a business.

Companies Operating in Highly Regulated Industries

If you fall in this category, you have to exercise due care to where your data is hosted. Highly regulated industries will have to comply to data privacy and security laws that regulates how and where personal information are processed, handled and stored.

While you may opt for a private cloud architecture, this option have the highest TCO and longer time to realise the ROI, especially if you are considering owning and setting up the cloud datacentre on-premise. Then, there is the technical certification and training costs for employees to be considered, while the datacentre itself to be maintained all year round.

Hybrid options, where you use a mix of private and public cloud can help lower your TCO in specific areas. But you would also need to consider whether there will be portability and compatibility considerations between the different environments and the additional costs incurred to be able to run both public and private systems side by side.

Fortunately, under the Malaysian government’s MyDigital initiative, investments into local hyperscale datacentres should bring with it the additional option for a multi-cloud configuration which complies to local hosting of data without companies having to fork out the cost for datacentre ownership, hence enabling a true Cloud-First strategy. In this setup, your TCO should significantly be reduced.

Small to Medium-sized Companies

Most small to medium-sized companies would be at a cost advantage by migrating to a public cloud and native services. Very often, those in this industry require mobility and flexibility in many areas; from handling a remote team or a global workforce, to cloud-native payment services and e-commerce platforms.

This is because public cloud makes accessing data and services easier anytime, anywhere. You are also freed from labour costs on managing and maintenance. Moreover, flexible payment options like pay-as-you-go or contracted over a period of several years may fit well in your budget planning. With this, you have the freedom to adjust and spread out the cloud budget accordingly.

 

 

The Blind Spots to Look Out For in Cloud Costs

Regardless of the options available, there are plenty of blind spots for your business to be on the lookout. While the cost of cloud may seem fairly clear cut, it pays to be aware of the little details such as potential risks and hidden costs.

In order to address these blind spots, conduct your own due diligence and use reliable tools like this Microsoft Azure calculator to helps you calculate the total cost, whether pay-as-you-go or over a contracted time period. There’s even a TCO calculator from Microsoft which you can use as well.

Create a checklist for your business and ask yourself key questions like:

  • Refactoring and Rework

    Do your digital assets (i.e. data, workloads, IT resources, or applications) require refactoring and reworking on the new cloud service? On top of how much it will all cost, how much time would it take and would these additional challenges cost more?

  • Environment Lock-in

    How flexible are your digital assets? How much vendor-proprietary components are involved? Can they be easily transferred or locked-in to the platform they were developed on? What are the additional costs to migrate your digital assets in the future?

  • Talent and Reskilling

    Do you have the budget and right employees to manage the cloud system? Are the skills to manage the cloud system easily transferable? How much would you need to set aside for employees professional certification and training? What is the cost for in-house cloud expertise?

  • Cloud Fees

    Could there be unexpected fees to look out for such as administrative overhead costs or egress fees? Does your CSP have direct liability over the cost of possible data breach? Are you covered with cyber liability insurance against data loss?

By taking note of these blind spots, you are assured of accurately budgeting for the cloud system your business need without the surprise of unexpected costs that could set you over.

 

Celcom - Your One-Stop Digital Solutions Provider

Celcom have been standing with Malaysian businesses for more than 30 years to deliver the widest mobile network nationwide. As a one-stop digital solutions provider, we bring a comprehensive and end-to-end service ranging from connectivity to innovative business solutions that is tailored to simplify the digitalisation of your business and enhance productivity.

Consult our sales personnel for more information on our range of cloud solutions, products and services.