Part 2: Cloud Economics - The details

In his previous blog, Danny Nicholson considered the challenges around cloud billing and cost management, especially for finance teams. In this second piece, he goes into more detail and presents reasons to chase cost savings, but also reasons to invest.
Few will dispute the tangible cost savings of cloud. But there will always be a need to create a compelling business case that defines an expected return when it is time to invest in the true value of cloud... continuous improvement to deliver real business agility.

A question of cost:

On the one hand, many organisations struggle to calculate the real cost implications of moving workloads to public cloud. There is perhaps no surprise here because building a business case is time-consuming and often an imprecise activity. The result is that many project teams simply skip this step and move straight to execution.

While forging ahead without a robust business case and detailed costs analysis needs to be avoided, only focusing on potential cost savings and getting caught up in pounds saved or spend avoided when adopting cloud services is only part of the picture.

A question of value:

That’s because the business value of operating in the cloud is also about agility, flexibility, and the ability to scale up, out and, importantly, down when new business models are created or changes in the economic climate occur. Therefore, organisations must also consider how to put a quantifiable value on the limitless projects and ideas that can be thought of, designed, provisioned, and torn down within a day.

So now an organisation is in the cloud with all its new features, applications and services, that’s it, right? Not exactly.

As I mentioned in Part One of this blog series, the granularity of billing in the cloud, if not prepared for, can be very daunting. Traditional CAPEX-oriented financial models no longer fit, and the move to pay-as-you-go or consumption-based costs and monthly bills can be alien to some finance teams. This is the area where cloud economics really comes into its own. Governance of the cloud landscape, alongside collaboration between your IT teams, cloud service partner, business peers, and finance teams will literally pay dividends.

This new collaborative network should act as a virtual governance team. It can be called many things but mostly it becomes the Cloud Centre of Excellence (CCOE). If introduced at the beginning of any cloud adoption project, it’s one of the most important ‘teams’ to build and it will help ensure success. With a team made up of representatives from a wide range of business and technology departments, it becomes easier to manage your cloud strategy, align the cloud to your business strategy, to effectively forecast budgets, and design how your organisation will manage costs in-life (FinOps).

I hope I’ve shown over this two-part blog that when considering cloud adoption, it’s important to not assume that ‘going to the cloud’ is going to simply save your organisation money. In most cases it will, but it is just as critical to fully understand the hard and soft benefits, decide how you will leverage cloud to drive new revenue growth and how you will operate as a business once in the cloud.

At Claranet, we adopt a four-phase consultancy approach called Competitive Edge to ensure rapid migrations to the cloud are successful. We help our customers understand the enormous benefits cloud brings as well as the hard facts and challenges organisations must plan for and prepare their teams for.

This partnership approach ensures organisations plan out their migration efficiently and effectively, helps build and integrate a Cloud Centre of Excellence (CCOE) and delivers the most important outcome – a compelling business case to help them transform their business in the cloud.