Analyzing costs in cloud business models

By James Parker, senior vice president of sales, Savvis, Network World |  Cloud Computing, iaas

Colocation, managed services, cloud and other IT outsourcing solutions have unique cost/benefit tradeoffs. Clearly, combining the best of each option in a hybrid solution offers the greatest flexibility for optimized cost models.

For example, when media and technology publisher Saxotech needed to manage its infrastructure in the face of changing publishing trends, reader preferences and mega-content consumption, it looked for a way to combine its outsourced colocation arrangement with private cloud. It found an economical solution that blended infrastructure management solutions, private cloud, managed storage, hosting and hosted area network services.

Cost considerations

Cloud strategies provide flexible, scalable solutions for managing on-demand resource allocation and fluctuating compute power. But what often initially attracts IT leaders is the potential for cost savings.

However, it's important to not go into cloud thinking it's all about cost savings or that cloud will be the remedy to all IT issues. More accurately, think of cloud as a tool to help optimize spending.

MORE: Gartner: Hype could hurt cloud adoption

The financial model for cloud revolves around moving to an operating expense model instead of one based on capital expenses, shifting to services from subscriptions, aligning costs with outcomes instead of technology and, of course, paying only for what you need when you need it. The move to cloud-based infrastructure means you can focus your efforts and resources on managing and growing your business.

As cloud changes your IT purchase plans, here are some of the cost factors to consider when evaluating options:

" Hardware and infrastructure. Cloud's obvious advantages lie with server consolidation and resource management. But don't forget to look at cost savings related to reduced data center space, power and cooling, and any networking costs. Hybrid and public cloud options, for example, may involve more extensive wide-area networking than that of private clouds.

" Lifecycle costs. Lifecycle costs lower dramatically when you're not relying on in-house infrastructure. Nevertheless, when negotiating cloud contracts, executives should examine implementation options with an eye toward future growth, basic versus advanced services or a blend of services, service-level agreements, security, and even compliance assurances and monitoring you may need over the course of the agreement.


Originally published on Network World |  Click here to read the original story.
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