How to Assess the Cost of a Private Cloud in Cloud Computing

What are your private cloud computing data center and IT operations actually costing you? It isn’t a simple question to answer. Most companies divide the area of expenses for IT into two buckets:

  • Capital expenditures are spent on buying equipment (servers, networks, storage systems).

  • Operating expenditures are the normal costs of operating a business day to day (salaries, system maintenance, and research and development).

Sometimes management likes the idea of not paying for equipment or a software package upfront. They may either want to pay in smaller, incremental payments. In this case, they might prefer a cloud platform.

  • Example 1: You anticipate some big IT investment expenditures. Public cloud offerings may look economically very attractive (so you can avoid those purchases).

  • Example 2: Your very large company has an excess of IT resources. You may want to work with what you have and re-architect as modular services. In addition, you might also want to add service management to support the automation of internal customers’ changing workloads.

There isn’t one right way to evaluate the economic benefits of public or private clouds. There may be some expenses in the public cloud that only become apparent after you’re already in your project.

Before getting started, figure out which option is the most appropriate for

  • Your company’s information technology strategy

  • Your security strategy

  • Your budgeting strategy

The economics of cloud computing are complicated.

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