- Before making an investment or change,
almost all organizations ask for the total cost
of ownership, or TCO, and the return on investment, or ROI.
This means that solid business cases need
to exist before migration can begin.
And it's been my experience that you need to create
a TCO and an ROI model that's able to stand up to scrutiny.
I've also found that this is where IT often falls down.
And that's a big oversight as these are the value metrics
by which you're going to be measured against.
We need to understand operational impact,
and business impact when approaching this problem.
This means creating three models, including a pure TCO,
which has all costs calculations, a TCO
plus the transactional costs, or the cost of migration.
Finally the ROI, which also includes full program cost,
versus value calculations.
It's important that you understand the source
and assumptions of all of these costs,
and how you came to understand these figures.
This means getting the initial data correct,
understanding that is how and why you make
the correct decisions around TCO and ROI.
We need to understand what's important to data
in the Cloud, looking at value categories.
Only then can we understand the impact of each category
by providing a weight, or what it means to our enterprise.
As part of this process,
you need to create a current state assessment.
This is basically how things are now, or the as is.
Next, we move to the to be,
architecture or what the Cloud deployment
will look like once it's done.
Then you can create the TCO model
as we described in the last slide.
From there, you can get to the more formal ROI,
as well as create a budget.
In order to create the current state assessment,
we need to do an application inventory
estate level assessment.
This means doing a sample application assessment,
full estate inventory,
and defining the application migration approach.
Service levels and operational environment assessment
means that you're working up to current infrastructure
and operational costs, current state architecture qualities
and requirements, and then current state operational models
and processes.
Value of agility is often an overlooked area,
and in many cases, this is the primary value point
of leveraging Cloud computing.
Moreover the cost of retiring selected application
infrastructure or data centers needs
to be understood as well.
You need to figure out the real costs, that includes
what to do with leftover hardware and software.
Also understand the changes required
to maintain service levels and software costs.
And don't forget
about the organizational transformation costs.
Researching and being able to discuss the total cost
of ownership, or TCO, and the return on investment, or ROI,
is an essential step.
Without this part of the project,
we'll have no idea of what success looks like.
Keep in mind, we're leveraging Cloud
to enhance and improve the overall business.