Cloud Computing: Total Cost Ownership

Why is TCO dependent on the type of the organization?

Organizations have different requirements on how their services need to run, and what is acceptable for non-functional requirements including scalability, security, compliance etc. All of these factors have direct implications on the architectures for the solutions for the organization, and therefore the total costs associated with them.

What are some of the challenges in determining the TCO for a certain cloud adoption project?

One of the major benefits of cloud models is the flexibility of the solution. Since solutions can be dynamically defined based on changing business criteria, cost prediction becomes more difficult depending on how flexible the organization wishes to be in its IT infrastructure. This has carry-through cost implication for R&D, training, staff retention, investment recovery and more. The greatest advantage of cloud it’s adaptability; but this can also be the greatest challenge to the business for any technology that the business is highly dependent on.

What factors inside and outside the company would complicate the calculations?

Examples of inside factors include organizational changes, training and education and changes in technology direction due to business needs. Outside factors include peaks and troughs in usage demands, changes in consumer service expectations to remain competitive, and disaster events requiring changes to architectures. Any of these may result in unplanned for alterations to the cloud-based infrastructure, and therefore unplanned costs that ideally would have been accounted for in the TCO.