Review the Budget Factors
Chapter 16, “Evaluating the Cloud’s Business Impact and Economics,” examines the steps you should perform to determine the return on investment and total cost of ownership for a cloud-based solution. Within Chapter 16, you will learn that the cloud’s pay-for-use model significantly reduces a company’s capital expenditures compared with what would normally be required to fund a data center. Further, you will learn that because of a cloud provider’s economies of scale, the providers can normally offer solutions for lower costs than a company would normally pay for the same on-site solution.
Before you move to the cloud, you should consider key budget factors:
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Current data-center costs breakdown
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Rent
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Power and air conditioning
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Collocation costs
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Server costs
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Data-storage costs
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Network costs
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Current payroll costs for existing site administrators and projections for possible staff-reduction opportunities
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Current costs for software licenses that may shift to the cloud and the (lower) projected cloud-based costs for the software
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Current payroll costs for patch-management and software version updates
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Current hardware maintenance costs
Within Chapter 16, you will find many cloud-based tools you can use to analyze the cloud’s potential economic impact on your company.
Leveraging Reserved Instances
As you have learned, one of the primary advantages to leveraging the cloud is the ability to scale the application on demand. When you must scale an application, you will typically pay the full price for the new resources. To reduce such potential costs, many cloud-service providers support the concept of reserved instances for which a customer will commit to a specific use for a given period of time. In exchange, the cloud-service provider will significantly discount additional resources. Before you select a cloud-service provider, consider the financial benefits of leveraging reserved instance.