behind the numbers: the tco of cloud applications · the tco of cloud applications since most cloud...

by Mike Krieger,IDG Strategic Marketing Services

IT deployments are undergoing a sea change asenterprises try to embrace the latest trends of cloud,big data and mobility.

For most businesses, calculating what it actually coststo bring their IT into the 21st century—total cost ofownership or TCO—is very misunderstood. Whatshould go into an organization’s TCO analysis, andwhat is best left on the accounting room floor? Readon to find out.

"We can’t afford to upgradeour information technology."In a world where the decade-old mantra is Do MoreWith Less, those responsible for informationtechnology in the business—whether IT, finance orthe owner—have struggled with the desire to reap thebenefits of the latest hardware and software balancedagainst a shrinking or flat IT budget.

To help organizations understand how deploying newtech solutions can actually help the bottom line, thenumber crunchers came up with two metrics: totalcost of ownership (TCO) and return on investment (ROI).

How does the TCO measurement change whenconsidering cloud-based solutions? Here’s what youshould take into account, according to a recent studyby Nucleus Research.

Behind the numbers: The TCO of cloud applications

Since most cloud offerings are subscription-based,there’s no up-front capital expenditure for hardwareor software. Next, look at manpower expenses todeploy new solutions. Traditional systems oftenrequire expensive customizations; cloud systemsusually require simple configurations which are notlabor intensive.

Time to deploy a cloud based solution is alsoreduced to 4-5 months on average, saving thebusiness in manpower and resources that aren’tconsumed with getting the new solutions up and running.

Since cloud offerings are designed with mobility inmind, there is inherent support for the broad variety ofdevices—tablets, phones and laptops that usersdemand, and access from anywhere with an internetconnection is the norm, so savings in remote accessand mobile support can be considerable as well.

Once the solution is up and running, there are evenmore cost saving benefits. Subscription pricingeliminates maintenance and upgrade expenses, andenables the business to move IT from capitalexpenditures to operating expenses, conserving cashfor other business needs.

When it is time to look for a new informationtechnology solution, look to the cloud first—the TCOsavings are present before, during and after you deploy.

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