There's a good article over at Leverhawk by Scott Bils on "The Real Story Behind Cloud and Financial Transparency" and corporate IT cost modelling and baselining versus cloud IT cost transparency.
It makes the point that corporate IT needs to expose IT cost down to the main and optional IT service elements for business IT as we now have with public cloud services, and also that corporate IT needs to switch to an periodic OPEX based cost model as cloud providers support, and not yearly CAPEX towards business units that they serve.
But in addition, the author makes the point that greater corporate IT cost transparency and move to OPEX cost model misses the bigger point, and that "the more significant impact that public cloud services have is that for the first time they expose corporate IT to the forces of market pricing."
This is of course a valid point, as it's now quite easy for internal business units now to compare internal IT costs with more or less, or increasingly better public cloud services. Both in the areas of IT infrastructure (IaaS) and application delivery (SaaS), for instance
Initially it might seem that both greater cost transparency and move to OPEX based cost model for corp IT as well as baselining and benchmarking against public cloud pricing is both a good thing and key driver for corporate IT cost efficiency and staying relevant, but there's also another angle here.
It makes the point that corporate IT needs to expose IT cost down to the main and optional IT service elements for business IT as we now have with public cloud services, and also that corporate IT needs to switch to an periodic OPEX based cost model as cloud providers support, and not yearly CAPEX towards business units that they serve.
But in addition, the author makes the point that greater corporate IT cost transparency and move to OPEX cost model misses the bigger point, and that "the more significant impact that public cloud services have is that for the first time they expose corporate IT to the forces of market pricing."
This is of course a valid point, as it's now quite easy for internal business units now to compare internal IT costs with more or less, or increasingly better public cloud services. Both in the areas of IT infrastructure (IaaS) and application delivery (SaaS), for instance
- Monthly cost of corp IT storage vs public cloud storage (GB/month with different SLAs)
- Monthly cost of server hours/month versus cloud VMs
- Monthly cost of apps and app suites like MS Office, SAP, Oracle and MS Sharepoint vs cloud based equals
Initially it might seem that both greater cost transparency and move to OPEX based cost model for corp IT as well as baselining and benchmarking against public cloud pricing is both a good thing and key driver for corporate IT cost efficiency and staying relevant, but there's also another angle here.
Public cloud pricing for application services in the SaaS domain also exposes and threatens the software licensing + yearly support model that most software companies has relied on for the last 10-20 years. Besides leaving out many middlemen that currently runs with the CD licensing model for software, doing on-site install, support and integrations for local installs, a cloud based delivery model also exposes the software vendors to the same pricing transparency and benchmarking opportunities that corp IT now has to live with.
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