Cost modelling can be tricky to navigate in the best of situations. When it comes to system migration to the cloud, things can get even more overwhelming. After all, there are many things at play here.
Cost modelling is part of our overall ICT strategy service. We offer it to all our clients, helping them understand cloud migration’s financial implications (up-front and ongoing).
This article contains a brief run-through of cloud migration cost modelling best practices. We’ll walk you through the basics of what you need to take into account.
Who needs to be involved with cloud migration cost modelling?
When it comes to cloud migration, there are a significant number of things to consider. Knowing who from your organisation needs to be involved with cost modelling is crucial. You don’t have to give everyone all the information, of course.
You should involve everyone in the following list (as a minimum) with your cost modelling strategy results:
- ICT department leaders
- ICT department staff (these have the best idea about the implications of time and effectiveness with their team)
- Accountants and finance teams
- Board of directors (if applicable) and upper managers
- Internal regulatory systems and teams
What do you need to consider for cloud migration cost modelling?
We divide cloud migration cost modelling into three sections: existing system costs, new system costs, and migration costs. These are – in general – the same chronological order as you’ll be working through.
Most items can be quite clearly placed into one of these categories. You can then see which step will be the most expensive and when to set target dates for raising funds.
Costs should be modelled monthly. Once the cost modelling draft is complete, your ICT department can review them alongside the finance team. They’ll then identify which costs are best to be amortised, capitalised, or included in the revenue costs. This process is affected by whatever regulations you are bound by.
Learn more about the specific costs involved below. Note that these are incomplete lists. Particular things to consider are unique to your organisation, for example.
1. Existing system costs
- Hardware purchase or rental
- Software purchase or rental
- Vendor support costs (for hardware and/or software)
- Internet connectivity
- Support (in-house or external)
- Data centre costs (building, power, heating, air-con, rates, etc.)
- Subscription renewal dates, amounts due, and refunds
- Number of users for each service (needed for comparing with a new SaaS service)
2. New system costs
- Internet connectivity (costs are likely to increase as cloud migration is based online)
- Hardware purchase, maintenance or rental (you might need technology upgrades for more RAM, for example. Also, some things can’t be migrated to the cloud)
- Vendor support
- Cloud costs (almost always subscription-based)
- Data Centre (these costs should reduce)
- Cost savings – the ICT department will be spending more, but this allows for savings throughout the rest of the organisational structure
- Support (in-house or external)
- Subscription renewal dates, amounts due, and refunds
- Number of users per service (for analysis)
3. Migration costs
- External resources (project managers, technical resources, etc.) – you’ll almost certainly need outside help to bolster your inhouse technical resources when facing off to a cloud vendor’s resources.
- Running the old Data Centre and new cloud services side-by-side (temporarily)
- Backfill (will your staff be working on supporting the old or new system? They can’t do both)
- Cloud Vendors such as Microsoft or AWS
- Cloud Vendor partners (e.g. Microsoft Partners, AWS Partners) who can supply resources at scale to support the programme with specialist skills.
- Up-front migration costs, such as improved bandwidth installation
AMDH Services Ltd and cost modelling
AMDH Services Ltd offers cost modelling as part of our overall ICT strategy service. As expert, trusted consultants, we’ll partner with your organisation to help you understand the full range of cost implications.
As we’ve alluded to, there’s a lot to think about. Your finance team then has to decide how to log each cost and the best way to produce your accounts and budgets.
Our service doesn’t stop there. We’ll also help you keep costs down by recommending specific products and connecting you with our links to the ICT industry.
Combined with an efficient, well-thought-out strategy, cost modelling provides you with targets to meet. You’ll know you’re on track to success as you carry out your plan.
Interested in how we can help with cost modelling? Why not get in touch with us through the form below for an obligation-free chat?
AMDH Services Ltd is an Office 365 and Azure specialist. As your ICT partner, we can help you optimise your cloud system to deliver greater cost efficiency and value. To find out how we can help, give us a call on 01332 322588.
