13 Apr 2016

Building cloud into your IT budget

With a new financial year almost upon us, many of us are deep in budget conversations for 2016-17, and for some of you that could mean securing funding to move into the world of hybrid cloud.

As we’ve previously talked about on The Voice, moving workloads into the cloud doesn’t have to be an all-or-nothing proposition. Rather it’s a case of working on what runs best in the cloud and on-premises, and splitting workloads between the two.

Perhaps you’re hoping to shift some workloads into the cloud this coming financial year or to ramp up cloud adoption based on your experiences in 2015-16?

Either way, you will need to try to calculate the costs of a cloud transition as accurately as possible to aid your budget business case, and to quantify what such a transition is likely to save your business.

One of the main savings from cloud is from moving IT costs out of capital expenditure and converting them to an operating expense.

There is presently a trend by companies to no longer own things that aren’t considered core to their business.

Many companies in the past year have questioned whether they need to buy, run and maintain their own IT equipment in their own data centre, or whether they can pay someone else to do that for them – knowing that the value for the company isn’t in the IT infrastructure, but in what they run on it.

So consuming IT infrastructure as a cloud service could free up time that can be re-invested in applications that add real value to the business.

Another advantage of moving to a cloud model is flexibility. You don’t need to commit to buy, run and maintain IT equipment, and can instead consume it as and when you need it.

However, you will need to factor in the unit costs of the cloud service, and the cost of transitioning workloads into it. For example, what happens to the old IT equipment that workload used to run on? Do I need new skills? How does running in the cloud affect software licensing?

A good conversation with a prospective cloud provider could save a lot of budget pain. That means scoping your planned deployment correctly by asking the right questions of the provider on their pricing structure, how services are set up, and their capacity to scale up to meet your demands.

You may find the Australian Department of Finance’s guidelines on budgeting for a cloud deployment useful when scoping your own project.

Among other things, they recommend understanding the commercial construct of a cloud contract and the risks associated with it, and putting in place some form of regular monitoring of service usage to manage your consumption costs.

On a practical level, when we at Brennan IT approach new cloud projects, we use our workload-based design methodology to help you find which workloads will run best in the cloud.

This kind of personalised mapping exercise can really help you answer questions about the economics of making cloud work for your business. Talk to us about how to get the process started.

And if, after all this, there is still some residual uncertainty in the business case for cloud, the best advice I can give you is to start small, but start somewhere.

Consider where you might be able to get the quickest customer-centric win in your business and seek funding for that small project.

Taking this kind of modular approach to your thinking about cloud means you can really focus on early success, demonstrating real business value, and creating the sort of evidence that can justify future budget to build on those successes.