Making sense of cloud TCO

Read time 4min 10sec

Many cloud providers try to describe the total cost of ownership (TCO) to their clients, yet they leave some key cost factors out of the calculations.

The TCO for solutions developed in a company could be emotionally charged.

The quest for a true TCO model is just as futile as the one presenting the solution. One is left wondering... how did the vendor find the figures it is presenting, and does the vendor actually believe its own creative accounting?

Cost will always be an argument for cloud, and as more people use the same service, the pricing will end up dropping and create an even better commercial model, one that defines the unique value proposition and impacts on service to customers.

Most companies only manage what they measure, which then creates blind spots in their operations. This has cost implications and an operational knock-on effect for products and services provided to market.

Don't lose focus

Companies need to look at the whole operation, understand where the costs are, and then make a decision as to whether it is in line with their strategic focus goals. Many large enterprise companies spend so much of their capex on the IT infrastructure and other avenues of business that are simply not core to their main business operations.

In future, creation of opportunities in business will not depend on the ability to create stability, but will be more focused on agility and innovation. The disruption of business will be considered normal, and even more important as most industries will prioritise customer retention and the customer journey.

Calculating the true cost of premises-based technology should focus on far more than just how much the air-conditioners and generators cost, as opposed to the facilities in data centres - and more on the cost of a lack of innovation or access to cutting-edge technologies that are able to disrupt the industry the company forms part of.

The access cloud provides to simple, cost-effective solutions, based on applications with a "try before you buy" model, gives companies the ability to use highly innovative technologies to create value propositions and opportunities an in-house development team would never have thought of.

Reinventing the wheel

If the core focus of a business is to service clients and make sure they have a great experience with every touch-point in the company, why would the company then want to try to innovate software to reach this goal, if the solution already exists?

The innovation will emerge from using systems and solutions based on other industries, in other countries, with larger consumer bases, and the same level of customised experience for valuable customers.

The TCO for solutions developed in a company could be emotionally charged.

Process optimisation and efficiencies based on productivity can only create a certain level of competitive advantage. A company will not only need to become streamlined, but also understand what its strategic focus is, and then manage the whole company based on the requirements of the markets it is servicing.

Cost-cutting and analysing the time a team spends on core business will create the winning formula to position the company as a global competitor.

The solutions chosen by a business need to include the ability to change and create metrics that disrupt the industry, not just another technology that provides information without having an impact.

The return on investment calculation needs to be based on the returns cloud innovation will bring to the whole organisation based on its unique ability to move from daily business to goals that will be a game-changer in the industry.

Disruption is not just based on technology, but on the thought leadership from the management team, which is able to look at the future of what the company is currently focused on, and understand where the customer's needs are developing. The problem with disruption is the difficulty in forecasting change, and the movement of consumers and customers towards products and services.

The predictable cost of service and the maintenance of infrastructure is becoming tougher; the calculation of the total cost over time becomes more complex.

Complexity of services and needs will create a higher level of service needs, which will inflate the cost of skilled labour to understand and deliver on company expectations.

In summary, it is crucial to understand that the cost of any solution or vendor application can only be predicted once one is able to make these calculations, based on the risk to the company in investing large amounts of capital into technology, which might devalue faster than the rate of change.

Kevin Hall

National sales manager, Elingo

Kevin Hall is national sales manager at people and enterprise-focused ICT company Elingo. Elingo is a specialist technology services business focused on multimedia contact centres and IP telephony, combined with business process automation (BPA). Hall is responsible for C-level engagement and is equipped with expertise and product knowledge to help clients identify their call centre and BPA needs, and then match these with the most effective solution. From his base in Johannesburg, Gauteng, Hall deals with decision-makers directly. He covers the entire spectrum of the Elingo solution, with specific attention to its value proposition, which is to offer the flexibility of cloud, on-premises or a hybrid solution, delivering business IP telephony and unified communications. Hall has experience in several key areas of technology development and application, including: outbound sales, debt collections, strategic analysis, call centre optimisation, cloud structural enhancement to business process, effective call centre management, call centres, process management, WFM, gamification and customer experience. Prior to his role at Elingo, Hall held senior positions at 1Stream, Intuate Group and RealConnect.

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