Cost Surprises Hidden by Clouds

When it comes to IT costs, nothing is ever simple, and the public cloud model is no exception. That’s why CFOs need to get smart and get involved.

One of the value propositions ballyhooed by vendors for moving from on-premise computing to the public cloud is that the latter will reduce your IT costs. This may or may not be the case.

In Why the Cloud Can Be Like a Subprime Mortgage, I touched on the lure of the low-entry cost of public cloud computing. With many businesses focusing sharply on managing short-term costs, multiyear total cost of ownership considerations are not always top of mind. But in certain instances, even after a relatively short time period, the cumulative cost of paying for a public cloud subscription may well exceed the cost of a conventional capitalize-and-depreciate perpetual-license purchase. For that reason, it behooves CFOs to perform a high-level comparative cost analysis between on-premise computing and the public cloud. This begins by opening up your old accounting textbook and looking up the rent vs. buy calculation.

But CFOs need to make sure their analysis does not stop there. Unfortunately, it’s not as simple as that.

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