What is the True Cost of Moving to the Cloud?

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For most nonprofits, the availability of excess financial resources are scarce. On the surface, it may seem like an afterthought that investing in technology is the best way to allocate resources. Especially when using that using that money could go to directly serving your mission. But transitioning to the cloud allows your team to become more flexible, efficient, and collaborative. Did we also mention that we ensure that nonprofits receive every software and product discount available. Remember that opportunity loss is a cost of not implementing technology as well. Successfully integrating into the cloud, saves time and service maintenance too, and has been shown to reduce costs by up to 50%. Below are things to keep in mind when transitioning to the cloud.

Audit your current IT infrastructure costs. 

A thorough understanding of the scale of your current operations is imperative, and an infrastructure audit is the first thing you should do. The audit will reveal what you’re currently paying to run IT and what your new cloud environment might look like.  

Taking a holistic view  and considering the total cost of using and maintaining your on-premise IT investment over time, and not just what you pay for infrastructure, will include direct and indirect costs:

Direct costs. How much do you pay (or have you paid) for your physical servers, software licenses, maintenance contracts, warranties, supplies, material, spare parts, and anything else?  

While you’re at it, you should also figure out how much network bandwidth, storage, and database capacity you consume with your servers and other technology.  Also, identify the details of your infrastructure, such as the number of servers you use, types of databases and storage capacity.

The second type of direct costs are operational costs. These can include:

  • Cost of labor for maintenance of your servers, databases and other technology
  • Cost to maintain the facilities that house IT hardware, such as real estate, staffing, and other facilities-related costs
  • Cost of connectivity to the internet
  • Any other costs that can be attributed to the care of your IT

Finally, you should include the administrative costs necessary to maintain your IT department.  These can include the resources from other departments in your organization - Human Resources, Procurement, Finance, to name a few - that are dedicated to managing your internal and external IT staff.

[May we suggest reading: Why Nonprofits Should Embrace Big Data & The Cloud]

Why Nonprofits Should Embrace Big Data & The Cloud

Why Nonprofits Should Embrace Big Data & The Cloud

Indirect Costs.  Indirect costs, while more difficult to calculate, are just as important as direct costs. The largest indirect cost is the loss of productivity suffered by your employees and customers if your IT infrastructure goes down. To calculate these costs, you can review log files to determine how often your servers go down and for how long, and multiply that time by an average hourly rate.  If you can estimate revenue lost due to downtime, that should be included as well.  Every company’s indirect cost situation will be different.  Indirect costs can be difficult to estimate, but are very important to consider, as they can make up a significant portion of overall IT costs.

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Topics: cloud, nonprofits

View the original article from Network World   Featured Image Courtesty of iStockPhoto/Creative-Touch

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