Why Focusing on Cost Could Cost You Dearly

By Charles Cooper 1

When you sit down with a prospective client to discuss migrating data to the cloud, the client will likely point to the grabby headlines promising amazing cost savings. Here’s where you look the client in the eye and say, “Short term or long term?”

That’s not a rhetorical question. In fact, it goes to the heart of one of the top reasons why enterprises and small and midsize businesses are rapidly embracing cloud computing. In study after study, IT professionals mention their desire to reduce costs as being among their chief reasons for taking the plunge.

But MSPs would do well by their clients to broaden the conversation. Not only will it play to the many strengths that experienced services providers can offer, but it can help avoid potentially unpleasant conversations later on when the client tallies up its initial costs and comes back to you with a litany of complaints.

Again, short term, long term.

Any ROI calculation is going to be hard because of the abstract nature of the cloud. But, in the short term, it’s entirely possible that the combined up-front expenses will be higher than when the company’s data was stored on-premises, behind a solid perimeter erected by the IT department.

If you clients on the idea of cloud computing with short-term cost savings as the primary goal, you deserve the blame when they start griping about hidden or unexpected expenses. Even though the cloud will allow companies to reduce staff and hardware costs, the overall price tag could still end up higher than originally expected–especially for small scale and temporary projects.

Of course, you could pull out a menu of search results to prove that they’ll still be ahead of the game over the long term. There’s a much-cited Booz Allen Hamilton study from 2009 that talked about how the cloud can save as much as 67% of the lifecycle cost for a 1,000-server deployment. Other research firms have similarly published projections concluding that cloud deployments delivered greater investment returns when compared to continuing with keeping your data on-premises.

But don’t bother even going there. Any MSP who came up through the ranks of value-added sales knows that cost is probably the weakest card to play, especially when you’re talking with a client about a fundamental transformation of their infrastructure, complete with new processes and new capabilities.

To be sure, companies that move to the cloud ought to be able to reduce their IT operating expenses over the course of the long term, especially since they won’t need to pay for any more one-time costs. But again, cost is just one of the benefits they will realize over time. There are myriad other benefits that deserve higher ranking, such as better efficiency and developmental agility, improved employee mobility and greater ability to innovate.

Doing more spade work on the front end can eliminate misunderstandings farther down the road. For instance, the client should expect that initial costs will entail paying for things such as running workloads in the cloud or compute instances, as well as the cost of bandwidth and software licenses. But MSPs should frame that within the larger context of the ultimate return on investment to the client once operations are running and it is using the many functions of cloud computing to become stronger competitors.

Flip over a cue card and hand it to your interlocutor with the following bullet points:

This is the holistic approach and–if done correctly–will fundamentally change the way the customer does business.

Yes, costs will indeed drop since the cloud computing model won’t require as many servers or as much intervention by IT personnel. But that should be the icing on the cake. Before then, there are too many other layers to examine first.

This content is underwritten by VMware — and is editorially independent. It is produced in accordance with conventional standards of business journalism.

Charles Cooper is an award-winning freelance author who writes about business and technology. During his 30-plus year career, he has worked as an executive editor at several leading tech publications including CNET, ZDNet, PC Week and Computer Shopper.