Cloud TCO Tips and Tricks

As I was leaving our local movie theater on a recent day out with my family, my daughter noticed that I looked annoyed. She asked what was wrong. I decided not to say what I was really thinking: that’s two hours and $30 we’d never get back.

This made me think about all the other small investments we make, and then the bigger things, which ultimately reminded me of a question I get asked regularly when talking to clients: how can I assess the benefits of moving to the cloud and managed services before making the investment?

Moving to the cloud can affect the bottom line. It can be hard to justify the total cost of ownership (TCO) upfront when you don’t have a clear understanding of what the key tangible and intangible benefits might be, especially when moving critical applications such as ERP applications to the cloud.

But even if you're familiar with the total cost of ownership (TCO) models, ensuring a true comparison in the cloud can be challenging. Organizations are taking a holistic perspective to include elements such as talent, capability, speed to market, and cost flexibility. Some comparisons consider metrics that are associated with the number of applications or users, but the encompassing peripheral view is also key.

TCO is the metric that organizations use to quantify and measure cloud adoption success. This perspective helps you understand the return on investment so that you can prioritize and focus. By capturing the key cost considerations, you gain a workable model that you can use to make informed decisions.

Elements of cost

In the past, you likely used TCO to determine costs for on-premises hardware and software. The factors were fairly straightforward to identify and include these costs:

·      Organization and talent

·      Capacity

·      Communications

·      Consulting

·      Software

·      Administration

In the cloud, these same factors apply, but many variations exist, and determining the cost can be difficult because many services are provided by cloud providers. In addition, the cloud can be optimizing your cost by changing from Capital expenditure Capex to Operational expenditure OpEx model. especially if you're using cloud capabilities such as automation modernization and utilization.that’s also lead you to be more agile for business and optimize your flexibility to IT spend.

So, let me wake you throw in how we can calculate Cloud TCO, what is the best practice, and what’s is tips and tricks to do this.

·      Starting Point:

As you would buy any other product or service, start with research. What do you want out of it? How will you measure the impact and ROI?

As a starting point moving to the cloud is all about finding the provider that's right for your organization. In the market you can find many cloud providers offering ‘IaaS, PaaS and SaaS’ services, however, it’s very important to consider choosing the right cloud provider which can optimize your IT budget spends and empower your business to achieve more.

For example: according to a recent CIO DIVE article in conjunction with Flexera data, IBM Cloud came in with the lowest prices across 67 cloud computing scenarios to beat out Microsoft, Google, and AWS. In fact, AWS offered the lowest price in only one instance; it had the highest price in 31 scenarios. IBM offered the lowest price in 28 scenarios and the highest in 13.

And this comes from In 2017 IBM reduced 26 cloud storage, networking, and compute prices over the course of six months. In 2018, they reduced the price of all IBM Cloud Virtual Servers and added more billing options for virtual instances. In 2019, they reduced IBM Cloud Bare Metal Server prices on average by 17% across the board and included 20TB of bandwidth, cost-free.

Tip 1: choose the right Cloud provider.

Start small. The key is not to think about it as installing a set of technologies, but instead adopt a cloud service from an outcome perspective. By tackling one service at a time, it’s easier to measure what worked and what didn’t. Did it reduce the cost? Does it perform to expectations? This is where best practices are drawn for future deployments.

What can and cannot be moved to the cloud? Moving an application to the cloud without making any changes defeats the purpose. At an IaaS level, evaluate things like data volume and privacy, licensing structure, and bandwidth costs to determine if the application will work well in a cloud environment:

Tip 2: Start small, monitor use and expand the service as needed

Cost considerations For an accurate TCO, you must catalog your current costs with costs that are expected from the cloud.

Physical environment When you compare hardware costs, consider server factors, such as hardware type, processing power, disk space, and server utilization.

Virtualization is a great step in making environments more easily available to users and is a key element in cloud provisioning. If you’re already heavily virtualized, you’ll have an easier time using cloud and  Cloud Providers offer many tools that can help you to calculate your cloud TCO However, you might also want to enhance virtualization through automation or containerization.

Consider how you might use containers and whether you can optimize density for cost. Also, consider the network impacts, such as latency and network speed. Depending on the cloud location, you might need extra infrastructure to support your applications.

Determine the level of support that you need and the level of support that the cloud service provider can offer. Cloud environments offer many options, for example IBM Cloud offers support level starting from nothing more than access to the environment to a fully managed service with patches and application-level support. It’s important to delineate the roles and responsibilities for the services that you need when you determine the cost impact.

Tip 3: To get the right TCO for your on-prime option and compare it with Cloud solution take in your consideration to calculate all on-prime elements such as IT personnel, location hardware insurance, service high availability and so on … because cloud modal is subscription-based with cloud provider support and on-prime model your responsibility to build and operate everything and this can lead much more time or more than your initial acquisition cost.

Application-level

Many cloud providers offer licenses for common software, or you might have options for different licensing options depending on the virtualized environments. The key is to fully capture the intended software use and model the licensing that you need.

For example, IBM Cloud has a catalog of images or containers that can make installation and deployment much easier. This approach doesn’t require more upfront effort and investment.

Tip 4: Review the architecture of each application to identify possible issues with migration to the cloud. In some cases, migration is as easy as lifting and shifting the application to another device. In other cases, an application might not run due to its architecture and might need to be refactored, rewritten, or replaced. Establish appropriate patterns for encapsulating costs for each disposition type. Consider whether applications can be replaced by new capabilities such as “Born on the cloud” apps or SaaS.

People

As with any new technology that you deploy to your organization, you must factor in skill-building and enablement to your enterprise. The enablement varies based on the role, but make sure that you have appropriate enablement to provide a complete TCO view and ensure successful adoption. You can also address enablement in the context of new hires or reskilling.

For example, IBM Cloud offers an organizational role framework that you can use to Capture the specific roles and responsibilities that are associated with the new environment. Cloud offers various models, from only the hardware to a fully managed service. To accurately factor in the cost, it’s critical to capture what your team does. Assessing the impact on your organization’s culture can be hard to quantify. Cloud has an affinity toward more agile processes, which might be a learning curve or cultural shift for your organization. 

Tip 5: When you capture TCO, it’s wise to reflect any cultural changes. You might consider and implement an organizational upgrade with a focus on cloud roles. You can also coalesce cloud roles and combine cloud functions into a cloud-aligned structure.

Key practices

Although TCO is unique to each organization, a few practices are common:

·      Use TCO calculators to establish a baseline. Many analysts and vendors provide calculators to help determine costs. These calculators can be a great starting point, but to account for all the costs, remember the considerations that you made about the physical environment, application, and people. Keep in mind the different cloud deployment and support models, noting which models might be the best for you, as they affect the cost. Most TCO calculators focus on technological attributes even though much of the consideration for cloud includes people, culture, and process.

·      It can become overwhelming to look at all the data to compile a true comparison of your costs. Instead, focus on the aspects that are most critical to your organization. For example, talent might need an upgrade in the context of skills, or organizations might need to adjust the structure to support a hybrid cloud model. These factors are key for cloud adoption success and consideration.

·      Capture the value of savings. Although TCO focuses on costs, it’s important to capture the corresponding value that is associated with the cost, whether in the form of cost savings, time-to-market improvements, or flexibility to explore different markets. Even if you don’t compile a full business case, a solid investment case that captures the costs and high-level value can help sell the effort and measure its progress.

·      Automate where possible. You’re probably already investing in automation for your current environments, but it’s critical to automate with the cloud. You can reap the benefits from self-serve access and achieve cost and time savings from consistent and repeatable automation.

·      Cloud requires a different approach. Cloud can be more costly than an on-premises environment if you're not using the right approach for the cloud. Cloud provides cost savings through automation, utilization, and standardization. If you're not embracing these updated approaches, you’ll struggle with finding the savings that you expect. Be aware of how your proposed approach affects cost.

·      Embrace agile practices. Many organizations use them. With the cloud, embracing agile practices is an opportunity to refocus your organization's culture to be willing to fail fast and pivot, resulting in shorter cycle times and quicker startup. Consider your current level of agility and what you might need to do as you build out the cost.

References: 

https://www.gartner.com/smarterwithgartner/jump-start-your-cloud-strategy-in-three-steps/

https://www.ibm.com/garage/method/practices/discover/total-cost-ownership-cloud/overview

https://www.ibm.com/cloud/blog/ibm-has-lowest-cloud-vendor-costs