The next time someone suggests that moving to a cloud-based solution will be a great idea because you’ll shift from spending a lot of money up-front to paying for a service month by month, politely remind them that this is often not the case.
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Speaking at an Oracle press launch earlier this week, IDC vice president Chris Morris pointed out that most current cloud projects require significant up-front effort, both for software development and to migrate existing data. The shift from simple software-as-a-service projects to infrastructure replacement requires a more sophisticated economic model than “here is the monthly charge per user”, he noted.
“The spend in cloud has really shifted,” Morris said. “With projects driven by line of business managers there are very significant uplift costs. It’s not really about monthly costs. The up-front spending can be as much as 30 or 40 per cent of the project.:
It’s a point Morris and others have made before, but given how often the claim comes up, it’s worth repeating. That doesn’t mean cloud computing doesn’t have benefits — it does — but you need to be clear about the financial implications and the potential for lock-in.