Third-party cloud solutions offer a truly transformational cost advantages over traditional on-premise hosting – but you’re not going to capture most of them with a rudimentary, “back of the envelope” analysis. That’s the lesson of our latest white paper, “Developing a cloud sourcing strategy: Two steps to calculate the total cost of ownership of your cloud,” which lays out the key steps to take when considering the total cost of ownership (TCO) of a move to the cloud.
For starters, let’s assume your cloud strategy is properly conceived. (If not, contact us now to resolve your first issue.) Using a realistic example in the white paper, we make the case that moving to a cloud-based solution can result in a TCO reduction of between 30 and 60 percent, as long as the solution is focused on “enabling business velocity”:
Business velocity, in simplest terms, is the ability to quickly meet the shifting needs of the business. Practical examples … include accelerating time to market, responsiveness to marketing campaigns and the ability to integrate mergers and acquisitions …
In a nutshell, business velocity is the difference between a “solution that works” and a “solution that truly jumpstarts your business.” When helping clients develop the solution that best meets their needs, we look at:
- Revenue growth – Identifying and capturing revenue streams, improving customer engagement and rapidly leveraging new market conditions to support growth.
- Cost reduction – Continuously capturing opportunities to improve operations, reducing cost relative to revenue and improving project time cycles.
- Brand reputation/risk – Adapting to threats or business restraints and mitigating business-impacting events.
In all three areas, a scalable, OPEX-based model can help drive value.
The next step is a complete analysis that goes beyond upfront financial costs to include staffing, migration, compliance and security. On-site hosting increases staffing costs, capital investments and maintenance. Third-party hosting smooths the costs over the length of a contract. Hosting in a certified third-party data center also generally increases uptime and future scalability.
And remember, any analysis you complete today will be a point-in-time activity. Organizations should revisit their cloud strategies annually to take advantage of future technologies, processes and innovation.
Read the white paper now to find out more and as always, please contact LeaseWeb to see how our solutions can help accelerate your business velocity!