Coca Cola_7080_Week 5 Essay
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THE ANALYSIS OF CLOUD COST
1
The Analysis of Cloud Cost
Student Name
7080
Wilmington University
June 9, 2023
THE ANALYSIS OF CLOUD COST
2
Cost Analysis of Cloud-based Solutions
Introduction
Cloud migration means an organization adopting cloud-based solutions. Organizations
are ditching on-premises IT solutions for cloud-based solutions because of the advantages
associated. However, cloud computing also involves costs. Organizations cannot achieve
maximum benefits from cloud computing without considering cloud cost management in their
adoption. Additionally, organizations must consider the ROI calculation for investments in cloud-
based solutions (Jamshidi et al., 2017, p. 1180). The analysis examined in cloud cost
management and ROI, among others, form the basis of this paper.
Analyzing Cloud Cost Management
Two types of costs are involved when an organization is implementing cloud-based
solutions. One type of costs, which also happens to be the most important is the cloud directly-
associated costs. These are the types of costs that can be directly linked to the use of cloud-based
solutions in an organization (Rashid & Chaturvedi, 2019, p. 422). Additionally, these are the type
of costs that an organization may have incurred at cloud computing project or jobsite and include
material costs, employee wages, and equipment costs. When adopting cloud-based solutions,
another type of costs involve is the website development costs. The website development costs
can be grouped as either capital or expense. Similar to directly associated costs, website
development costs are also important in cloud-based solutions (Rashid & Chaturvedi, 2019, p.
426).
Calculating ROI for Cloud-based Solutions
The simplest way of calculating ROI is first subtracting the cost of investment from the
return and dividing the difference by the cost of investment. The resultant percentage or ratio is
THE ANALYSIS OF CLOUD COST
3
the ROI. However, finding ROI does not consider some elements that an organization may desire
in cloud-based solutions like user satisfaction (Vidhyalakshmi & Kumar, 2016, 383). When
calculating ROI for cloud-based solutions using this formula, it can be tricky. The most effective
way of calculating ROI for cloud-based solutions is to consider all measurable factors.
Additionally, an organization must establish a constant time frame. However, an organization
may not be able to take everything into account and, therefore, calculating ROI may not be the
best way for an organization to justify whether to invest in a cloud-based solution or not
(Vidhyalakshmi & Kumar, 2016, 379).
Administrative Costs in Cloud Computing
After the adoption of cloud computing which involves an organization incurring costs of
migration from the on-premises environment, an organization must continue incurring
administrative costs. One of the administrative costs is the compute costs. In relation to the
compute costs, an organization pays based on the number and types of instances used during a
specific period (Rashid & Chaturvedi, 2019, p. 425). Another administrative costs is the storage
costs. Storage is provided as a service and organizations must pay monthly the amount of storage
they may have utilized on a monthly basis. Additionally, organizations may have to pay for an
entire storage volume especially for managed storage services. Another administrative cost is
associated with networking. Organizations are billed based on the data transmitted into their
cloud service and out of the cloud service (Rashid & Chaturvedi, 2019, p. 426).
Start-up and Ongoing Costs in Cloud Computing
Cloud migration is advantageous to every organization. However, cloud migration comes
with both start-up and ongoing costs especially in relation to the technical aspects of cloud
computing. Examples of start-up costs are cost of purchasing cloud equipment like data center.
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THE ANALYSIS OF CLOUD COST
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Additionally, there are costs for repurposing the existing IT infrastructure and costs of carrying
out repairs beyond routine maintenance. On the other hand, ongoing costs are software support
costs, cloud subscription costs for software and storage spaces (Vidhyalakshmi & Kumar, 2016,
394).
Difference between Digital Licenses and On-premises Licenses
There are two types of software licensing – digital software licensing and the traditional
on-premises licensing. These two types of licensing differ based on how they are acquired.
Digital licensing is more associated with cloud-based solutions. Specifically, digital licensing can
be taken as an organization renting software whose licensing is paid for on a subscription basis
either monthly or annually (Fisher, 2018, p. 1991). Whether the payment is paid for on a monthly
or annual basis, it includes software updates and technical support. The traditional on-premises
licensing is the type which involves an initial cost for purchasing the license to use software. In
order for users to get updates and technical support, they have to pay subscription cost annually
(Fisher, 2018, p. 1991).
Conclusion
Without the analysis of cloud cost management, organizations cannot achieve optimum
benefit from cloud computing. Therefore, after the adoption of cloud, organizations must
examine cloud cost management. Cloud cost management involves multiple things including the
type of software an organization is to adopt. The descriptions in this paper of the cloud cost
analysis show the importance of an organization not only adopting cloud-based solutions, but
also managing their costs.
THE ANALYSIS OF CLOUD COST
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References
Fisher, C. (2018). Cloud versus on-premise computing.
American Journal of Industrial and
Business Management
,
8
(09), 1991. DOI: 10.4236/ajibm.2018.89133
Jamshidi, P., Pahl, C., & Mendonça, N. C. (2017). Pattern‐based multi‐cloud architecture
migration.
Software: Practice and Experience
,
47
(9), 1159-1184.
https://doi.org/10.1002/spe.2442
Rashid, A., & Chaturvedi, A. (2019). Cloud computing characteristics and services: a brief
review.
International Journal of Computer Sciences and Engineering
,
7
(2), 421-426.
DOI: https://doi.org/10.26438/ijcse/v7i2.421426
Vidhyalakshmi, R., & Kumar, V. (2016). Determinants of cloud computing adoption by
SMEs.
International Journal of Business Information Systems
,
22
(3), 375-395.
https://doi.org/10.1504/IJBIS.2016.076878