The prices quoted by public cloud providers, for example, tend to only include the bare minimum – what clients will be paying for each user – but this only scratches the surface. To get a better picture of true costs, companies need to ask themselves tough questions about what choosing this kind of path, or any of the alternatives, will do to impact the organization overall, like:
- Who will be supporting your enterprise solutions? Will this implementation require hiring additional FTEs?
- If something goes wrong, who will be responsible for a fix, and what is the monetary value of the information potentially at risk? What expenses are related to a disaster recovery plan?
- Do you have sufficient equipment to support implementation, or will moving forward require purchasing additional workstations, software, or hardware?
- How will utility bills, like telecom services, change or grow with the addition of further services?
- What are current maintenance costs? How much maintenance do the services you are looking to replace entail?
These kinds of hidden expenses are imperative to include when considering the acquisition of any product or service as they aren’t negotiable. When solutions are implemented, these kinds of factors are inevitable, so understanding these TCO components before making a choice can make or break financial stability. Opportunity cost shouldn’t be a point of concern in the future.
Take, for example, private cloud platforms. At first glance, many third-party private cloud providers appear to be much more expensive. For companies on a shoestring budget, even the benefits provided by a private cloud can seem too expensive. However, a TCO analysis can provide a more realistic breakdown of acquisition costs as well as overall direct and indirect expenses. Many private cloud packages include things like support services, reducing the need for on-site employees, as well as coverage of ISP and telco bills. This alone can even out price points, putting a private cloud on the same level – and many times ahead of – a public option.