Business Case
Create a strong business case to drive senior level sponsorship, align expectations, and provide a solid planning foundation for cloud adoption.
The business or IT sponsor of your cloud adoption initiative, in partnership with an executive sponsor, is in the best position to lead the creation of a business case. To create a business case that can be implemented successfully, it's important to solicit input from the subject matter experts in your organization who have an in-depth knowledge of the people, processes, and technologies that will be affected by your cloud adoption initiative.
Use the goals that you defined previously to build a business case for cloud adoption. The business case starts with a prioritization of your goals, including key performance indicators (KPIs). By prioritizing and quantifying your business goals, you economically validate the goals in relation to the technical, human, and financial investment that is required.
The business case should include an analysis of the economic impact of your cloud transformation. It should also include a return-on-investment analysis, which provides a comprehensive description of the required investments and the expected outcomes.
The following table summarizes the key aspects to capture in your cloud adoption business case.
| Elements of a Business Case | Areas for Analysis |
|---|---|
|
Executive summary (1 page maximum) |
What is the goal of cloud adoption? What is the business value of your cloud adoption initiative? What resources and investments are needed? When will the benefits be seen? Tip: The executive summary should appear at the beginning of the business case document. When you are drafting the document, however, it might be easier to write the summary after you compile the other information. |
| Prioritized goals | Goals and KPIs |
| Cloud technology adoption strategy |
Examples: Technical solutions
|
| Financial details - total cost of ownership (TCO) |
Financial investments needed:
For more information about how to calculate TCO, see Total Cost of Ownership: Quantifying the Investment. |
| Benefits - return on investment (ROI) |
Benchmarking:
Financial benefits:
Technical benefits:
|
| Human resources needed - resource management strategy |
|
| Cloud adoption plan |
Identify the specific applications to migrate and build in the cloud:
|
| Cloud adoption process |
|
| Estimated timelines |
|
| Recommendations | How should your organization proceed with its cloud adoption initiative? |
Total Cost of Ownership: Quantifying the Investment
Evaluating the total cost of ownership will ensure that your organization is prepared to shift vendors, or to evolve from an on-premises IT procurement process to a cloud-based investment model.
Total cost of ownership (TCO) is the sum of all costs that are involved in the purchase, operation, and maintenance of an asset during the asset's lifetime. A TCO analysis can help your organization to understand the cost of an asset beyond its initial purchase price, and is useful for understanding return on investment. Determining the right systems, services, and infrastructure is important for building a solid business case.
In the context of cloud computing, TCO is the overall cost of setting up, operating, and maintaining your resources and applications in the cloud. When creating a TCO analysis for cloud infrastructure, use your current and predicted usage as a baseline, but also understand that the cloud is an inherently dynamic ecosystem and your organization's future costs will respond accordingly.
When organizations calculate cloud TCO, they often make a like-to-like comparison between the costs of running on-premises workloads and the cost of running the same workloads in the cloud. That is, organizations compare the initial purchase price of hardware and software in an on-premises environment to the monthly subscription cost of cloud computing. Although this is a good place to start, you should also evaluate the opportunity costs of not switching to the cloud. Adopting a cloud solution can provide intangible benefits such as increased agility, faster time to market, increased productivity, and a cost-effective response to elastic demand.
A TCO analysis is unique to each organization. Depending on your needs, you can choose to perform a comprehensive cost analysis or focus only on the areas that are most important to your organization. The following table includes some common costs to consider in your analysis.
| Cost Area | Examples |
|---|---|
| Compute | Servers, rack chassis power distribution units (PDUs), top-of-rack (ToR) switches, maintenance |
| Storage | Storage disks, fiber channel storage area network (FC SAN) switches, maintenance |
| Networking | LAN switches, load balancers, bandwidth costs, maintenance |
| Facilities | Space, power, cooling, maintenance |
| Security | Firewalls, network domain security (NDS), intrusion detection systems (IDS), maintenance |
| Software | Licenses, renewals, upgrades |
| People | Hiring, training |
| Disaster recovery | Alternate sites, idling infrastructure |
| Migration | Rehosting, refactoring, revising, rebuilding, replacing |
| Opportunity costs |
Potential value of eliminating capital expenditures Potential value of increased agility Potential value of faster time to market Potential value of increased productivity |