• Larry Gregory

Cloud Operational Cost Factors

Software companies moving to the cloud are faced with an architecture decision between Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). In addition to itemizing individual cloud resource costs, companies must consider the less obvious operational costs. By evaluating these in conjunction with explicit resource costs (and the business drivers), companies can make the right cloud platform decision.


Following are cloud operational cost factors to consider in context of cloud platform models (IaaS vs. PaaS) and cloud platform vendors. Hint: you can download a more comprehensive treatment of cloud operational cost factors (in PDF format) using the form at the bottom of this post.

  1. Configuration Management: change management, resource tracking, patch management.

  2. Deployment: provisioning and activation of new customers

  3. Asset Management: identify and track provisioned resources

  4. Capacity Management: resource re-allocation of underlying services in response to configuration conflicts and capacity limits

  5. Extensibility: customization and integration with partner/customer applications

  6. Performance Management: availability, QoS, performance tuning

  7. Network Management: DNS configuration, VPN connectivity

  8. Security and Access Management: assessment of API, console, OS, network and data access

  9. Data Integration: normalization of data sets, synchronization, portability

  10. Backup Management: disaster recovery and backup, business continuity

  11. Training: IT staff, end user training requirements

  12. Support/Service Desk: incident management complexity/volume, outage response

When evaluating the move to a cloud platform, you should weigh the revenue opportunity, potential sales channels, and development & operational costs. Consider your platform potential in addition to the direct customer solution: a platform approach enables a broader partner ecosystem and a more scalable business.

Discussion Topics

  1. What are the time to market factors that influence your cloud platform choice? What is the competitive urgency and customer opportunity window as first-mover?

  2. How does the platform choice enable new innovation? What is the expected revenue potential for the future of the product and what runway does that provide for R&D investments?

  3. What are the financial implications of alternative pricing models? What is the impact on channel incentives and structure?

  4. How will you enable a scalable partner foundation? What opportunities exist to architect as a cloud building block for others?

Related posts: 5 Steps to Implement an Effective Cloud Partner StrategyCloud Platform Building Blocks.


The Cloud Operational Cost Factors whitepaper is available in the Resources area.



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