Weighing the Costs — and Benefits — of the Cloud

Weighing the Costs — and Benefits — of the Cloud

By Sudarshan Ranganath on Thursday, October 30, 2014

No matter how promising a new technology innovation might sound to your institution, the choice to invest in new tools and resources comes down to a business decision — or what finance teams call a “cost-benefit” analysis.

The equation is simple: the costs of implementing and managing a technology versus the benefits that that investment stands to bring to the institution.

Seems straightforward enough. But when it comes to something as nuanced as, say, the cloud in higher education, a sound investment requires unique expertise in several areas, from data security to privacy to application.

When integrated effectively, cloud-based tools increase capabilities, lower total cost of ownership and reduce the amount of staff and resources needed to manage certain functions.

Articulating the full value that a move to the cloud offers requires thoughtful consideration. To simplify the process, we boiled the hard costs of cloud computing down to four essential touch points:

  • Datacenter infrastructure: All server and network hardware, facilities, power supplies, security and monitoring equipment.
  • Licensing: Operating system licenses, database licenses, and any other elements that require a license to operate.
  • Labor: Databases, operating systems and servers — each of which require the knowledge of skilled IT pros. This also includes technical support, security, monitoring, maintenance, upgrades, and data backup/recovery.
  • Training: It takes time and money to bring your IT team, administrators and internal departments up to speed on cloud computing.

Our advice: Develop a roadmap for how you plan to integrate the cloud into each of these critical areas of your institution. Then calculate the benefits in one of two ways:

Cost reduction: First, conduct an audit of current costs by considering each of the four elements. Now, examine how migrating to the cloud could potentially reduce those costs. That might translate into paying less for smaller technology facilities, reducing power costs, buying and provisioning different kinds of hardware, eliminating redundant software licenses, shuttering obsolete training programs, or making more effective use of employees’ time.

Cost avoidance and value-added benefits: This approach is different from a standard cost reduction model in that requires a more meticulous evaluation. In addition to current costs, consider how the cloud might help your institution avoid future costs. Factors to consider include the value of greater application availability and the value of improved security or disaster recoverability. For more ideas, check out the chart below. 

TCO reduction: datacenter infrastructure

And that’s just an analysis of the benefits of the cloud for datacenter infrastructure. For an in-depth look at the possible benefits of the cloud for your institution, visit our Cloud Solutions page.

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  • On 11/30/2015 06:32:58 PM Paul Lamping said:

    How does Ellucian plan to address the unresolved concerns about the clients' loss of data ownership in that the cloud company now becomes a de facto owner of all our private data (really, our student’s data).