cloud costs

INDUSTRY INSIGHT

Cost considerations in cloud migration decisions

Before IT managers can decide whether operating their systems would be less expensive to run  in the cloud rather than in their own data centers, they must compare a number of critical items.  Those that haven’t done this analysis or don't know how are in good company.  Most organizations have no clue.

The rack and stack of a business case to transition to cloud requires careful analysis.  Though most cloud service providers tout cost effectiveness as a key value to their solutions, the reality is that an analysis must determine the actual cost benefit of transition to a CSP.  Cost-benefit analysis is complicated because of the dynamic nature of cloud computing.  Some questions to consideration before a cloud migration include:   

Does the CSP support the underlying technology in a solution?  Though CSPs support a diverse set of technologies,  it is not unusual for the government to use an out-of-lifecycle technology that may not be supported by the CSP.

What are the costs of current software and do they increase if the system is moved to a CSP?   IT managers must review of all the software licensing agreements when transitioning to a CSP. Although the CSP may allow agencies to bring their own licenses, the software vendor may have clauses that preclude the use of a cloud service and/or may require the procurement of a different product to support the cloud environment. 

Does the solution lock the agency into a particular CSP or product?  Some CSPs make the transfer to another cloud provider difficult or impossible through the introduction of proprietary technology.  Ensure there is a method to transfer out through contractual and legal means prior to entering an agreement.  Ironically, the effort to prevent this solution lock could cause another lock (i.e. the product that was supposed to allow portability between cloud services is in itself a propriety solution that must be maintained).

Is there an initial charge to transfer data?  Some CSPs charge an upload and download fee.

What is the cost to store data? There are different ways to store data on a CSP.  If immediate access is not required, the storage costs go down; however, there could be significant performance impacts if the data is archived and not readily available.  Plus, growth of data needs to be considered as part of the analysis.

What are the costs of power and space?  Although agencies may expect to  save on power and space as their systems will be on the CSP site, if they must maintain the existing facility, regardless of transfer, there may not be an offset. 

Is this application ready for to be transitioned to a CSP? Hidden costs can also occur if applications aren't primed to take full advantage of the capabilities of cloud computing.  Also, if the application is not a good candidate to move to a CSP, additional costs will occur to engineer it for transition.    

What are the requirements around securing data in the CSP?  Compliance remains the agency's responsibility even with a cloud offering that meets the Federal Risk and Authorization Management Program requirements -- and achieving and maintain that compliance can be expensive.   

When a cost-benefit analysis is performed, the comparative assessment helps IT managers decide whether to undertake the project. Anticipated benefits are expressed in monetary equivalents (such as reduced costs). Both nonrecurring and recurring costs must be captured and are not always known. 

Moreover, for cloud projects, potential costs for maintaining an “as is” state, costs for project failure and opportunity cost as well as associated risk of transitioning to a CSP should be factored into the business case. These risks are hard to quantify, and it is not unusual for them to be discounted.

Though the “cloud first” policy came into being in 2010 in the federal space, several agencies are still experiencing growing pains.   Agencies that are new to using CSPs should plan for delays due to policy, security compliance and acquisition and expect some surprising and unique costs. 

When evaluating whether to take the plunge and go to the cloud, agencies should look at both potential benefits (there are many) and the actual costs and take steps to manage risks and unexpected costs during a cloud services transition.

About the Author

Cristina Gillaspie is an IT consultant who helps innovative organizations develop cloud solutions.

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