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Your Cloud Economics – An Evolution in TCO

The very first question, often before discussing the why’s and how’s of cloud transformation, is “how much will it cost?” Of course, there is a well documented answer – “it depends!”. But what you don’t often hear is what the total cost of transformation actually depends on! I will attempt to provide some clarity to the cost items you should be considering in a shift left, a containerization play, modern data moves, or an app migration to the cloud. And guess what, the inputs to the calculation methodology don’t change much, because unfortunately, it still depends…it depends on you!

The dependent factors that impact success or failure, and the resulting costs, of your transformation project are usually found within your own walls. Outside your business, the tech is there, the solutions exist, and many are running them daily without looking back. Costs are not overly complicated to calculate on a greenfield build, but inside your walls, inside your legacy apps, and inside your teams, there is a different story. It’s your business’ ability to adapt and make changes that will impact the Total Cost of Ownership in an app or platform transformation. And what are those dependent factors? In our experiences, it is a combination of the goals, measurement, and willingness to succeed.

Leadership

Change in IT may start with grassroots projects or shadow IT, but the earlier and more complete buy-in a company has from its leadership, the more successful it will be, while requiring lower overall funding from the business. Leadership needs to spearhead new projects and identify how their business can truly benefit from transformational IT, then implement it as a shared mandate across the organization. Common language, supportive goals, long-term vision, and a willingness to accept change at the top will permeate all layers of a modern business.

Legacy

How deep is your reliance on your owned older technology? Are you married to your Cobol apps or physical data centre? Often the highest TCO costs related to our engagements are due to a client’s desire to maintain the aging platform and simply “retro-fit” their application or data for the cloud.

Let’s rephrase that – “desire” was the wrong word.

You’ve been told you have applications that for some reason or another can’t be moved to the cloud. However, from the countless projects we’ve been involved with at the world’s largest banks, telcos, broadcasters, manufactures, and retailers – yes we’ve done these projects 100’s of times – there are only a handful of cases where cloud has been unable to solve AppMod challenges.

As we speak to many of our clients in the early stages of our courtship, it’s not that they “desire” to have on-prem workloads – it’s that they haven’t had a partner to explain to them exactly how those workloads can securely and predictably be moved to the cloud. As we wrote about in THIS BLOG – having a great team helps you get rid of legacy.

Maintaining a physical data centre and all the costs associated with that approach will only lengthen the eventual transformation to not-your-servers. Remember the last time you saw a telephone switching room? Did you know that almost every business needed to manage their own back in the 1960’s? Just like you wouldn’t ask a new hire to only use his desk phone to contact the world, you can’t expect new product owners and developers to want to work in antiquated processes on antiquated hardware.

Business

How does your business operate fundamentally?  How are costs measured and budgets set?  Who is your next client base and what will you sell them?  The new-world of consumption based economics demands a new process for goal setting and measuring results. Costs that were once limited to an IT division, should now be spread across the entire business, just like the resultant solutions in IT. New apps, new delivery methods, and new target clients mean you need new budgeting and planning methods. This is often where initial TCO conversations stop with legacy organizations: “IT costs me $10 today, unless cloud modernization will reduce my costs to <$10, I’m not interested”. They are measuring future business with a historical yard stick. Instead, think of what your competitors are doing. How are they planning to disrupt your business model? What would you do to compete with your company if you were in their shoes…and how would you disrupt?

Transformation to the new modern computing paradigm doesn’t happen overnight.
It starts with a company-wide vision, and evolves through constant execution at all levels and in all departments. I’ve written previously about achieving a higher level of Cloud Maturity. If you want to truly modernize your business, the program can’t stop at lift-and-shifting some of your apps to the cloud. It must be immersive. And once you’ve accepted a comprehensive technology modernization approach, you’ll quickly see how the TCO should spread across your organization. Better yet, you’ll see all the benefits pervasively!

If you’re still struggling to see the “Cloud TCO” connection with your business, look at it this way: How long will it take the automotive industry to completely switch to electric cars? Decades, right? Because it requires leadership buy-in, a complete phase out of legacy infrastructure, new design and build methods, and new go-to-market approaches, all to support a modern solution to the age-old problem of getting from one place to another. But once we get there, the benefits will permeate the globe, not just affecting automotive manufacturers, but all the supporting industries, and the consumers as well. The auto companies can’t get there alone, and neither can your IT department.

As consultants at Arctiq, we are trained to see the opportunities for modernization with each client interaction. Our RAMP methodology ensures clients see the bigger picture, even if their budget can only support a prototype. We will help show the potential benefits of a comprehensive modernization approach, then help you execute.

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Mike Morrison

Mike is President and co-founder of Arctiq.