I was recently asked by a client – What is the right spend on cloud for my organization?  The client was asking about both cloud software (SaaS – Software as a Service) and cloud infrastructure (IaaS – Infrastructure as a Service).  In their technology profile, they had the opportunity to use several cloud applications that ideally fit their organization but they also had some proprietary systems that were a key competitive advantage.  In this particular instance, they had a significant investment in servers and infrastructure in two on-premise locations.

Beside cost, we discussed several other considerations.  From these considerations, we developed a method to evaluate their “public” cloud vs. their private cloud / on-premise spend.

Cost:  Cost is a critical component of the cloud decision-making process and any comparison needs to be apple to apple.  We included people, infrastructure, disaster recovery systems, information security spend and several other components to evaluate cost.

Functionality:  For the software component, there were a number of cloud software systems that fit their needs well and they selected several platforms and migrated their processing to them.  However, they kept some of their custom written systems since they felt those provided a competitive edge.

Integration:  For integration, they selected a cloud-based system to integrate data between their cloud software platforms and to/from with their on-premise, proprietary systems.  This was very cost effective, as they built most of their integrations in a single tool.

Flexibility: One of the reasons they choose to keep some of their proprietary software was their need for flexibility in their core business.  While some cloud software vendors have good flexibility and market add-ons that can add functionality, there are often key business areas that require highly customized software and systems.  

Availability: Cloud infrastructure and applications are designed to be highly available.  On-premise can take much more internal effort to be highly available and to ensure there is a disaster recovery capability.

Scalability: A huge advantage for cloud software and infrastructure is scalability as many customers depend on it and the providers have made it easier to scale (up and down).  On premise / private cloud needs to be designed properly for scalability and can be less adaptable for scaling.

Deployment: Cloud software and infrastructure is easily deployed (sometimes too easily and there can be pockets of subscriptions that are not being used).  On premise systems can suffer from slow deployment.

Security:  Many think that public cloud security is a big challenge, but many of the cloud companies have invested heavily in protecting their client’s data.  Good due diligence about information security is still a key factor in the cloud decision.  On premise software can be expensive to properly secure and monitor. 

The client ended up with a “hybrid” model, which is where many companies operate – some cloud capabilities and some on-premise/private cloud.

Conclusion:  The “right cloud spend” should be evaluated from an overall cost and a strategic perspective, taking into account a number of key decision criteria.

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Dan Brown is a senior technology executive with a wide range of technology, operational and senior leadership capabilities. As a strong leader, he has a proven track record of aligning technology organizations with corporate strategy, building / rejuvenating technology teams and leading organizations through growth and rapid change.