Krish wrote a post covering a report which showed that the costs involved in utilizing converged infrastructure (ie a consistent approach towards hardware and software that sees everything in a data center fit together like lego) runs to some 15% more expensive than when using a more “Do It Yourself” approach.
The topic of cost savings is a really interesting one and one which is directly analogous to the decision on whether to move to the Cloud. I’m often contacted by organizations that have a significant investment in on-premise kit but who are looking at options with that kit – perhaps some gear is coming to end-of-life and they’re having to re-invest, or perhaps some scaling issues have them looking to the Cloud. In a previous CloudU report we talked at length about the economics of Cloud Computing, we told of the fact that one unit of measure from a Cloud provider will cost less than one unit of measure when delivered on-premise. A comment on Krish’s post speaks directly to this fact, Ranjit Nayak says that;
The CFO quoted in the blog has not taken into account Operational Expenses with the initial Capital Expenses. Your blog lists several potential gains with the UCS which will almost certainly be accrued in a cloud environment that demands scalability,agility, and dynamic workload balancing. The CFO quoted has not taken into account, management of the infrastructure beyond the initial installation
This is in fact true – in Krish’s example a unified approach should deliver benefits by way of reduced operational expenditure (less time with sys admins having to work out run arounds for heterogeneous equipment) but there’s another factor that is really important – that shows benefits with converged infrastructure as opposed to DIY, but even more so shows benefits from Cloud as opposed to on-premise of any flavor. And that’s the factors around focus.
If we accept that the role of IT is to aid an organization in its strategic objectives, then it makes sense that any time it spends doing low level routine stuff is detrimental to that aim. Any technology that frees up IT to do higher order stuff, to really add value, should be embraced. Almost regardless of the cost.
Put it this way – if an average strategic enterprise project has a return of investment of, let’s say, 100%. Then it makes obvious sense that paying a premium of 10% or 20% in order to free up time to devote to strategic activities is a smart investment. The return outweighs the price paid. And over time these aspects multiply.
It’s for this reason that I call on organizations to not simply create a cost comparison matrix when running due diligence of Cloud vs on-prem. Cloud delivers benefits far beyond cost, and the fact is that the cost side of the ledger may in fact be less beneficial with Cloud deliver than with on-prem. But by really focusing in on what your IT department is currently doing, and what they’re do ideally, it’s easy to se the extra value that Cloud brings by way of heightened focus.
(Cross-posted @ The Diversity Blog - SaaS, Cloud & Business Strategy)