Cost Justification in the Era of the Cloud

Michael Vizard

Just about every IT organization is being asked to justify what it can deliver using internal resources versus those available in the cloud. The trouble is that the tools that can make or break the financial argument for or against cloud computing usually involve cobbling together various spreadsheets in the hopes of getting the right answer.

Apptio, which provides IT budgeting tools as a cloud computing service, wants to change that with new tools designed specifically to help IT organizations figure out what types of applications can cost effectively be moved to the cloud.

Figuring this issue out on a case-by-case basis is becoming crucial. Obviously, not every service can be delivered more effectively by an internal IT department, but the internal staff likely will have the edge the more mission-critical the application. But most IT organizations lack specific financial tools to show, in a way the business can understand, how much it costs to deliver a specific IT service.



IT leaders still need to make the case on the merits of any given service, but when fighting the good fight for internal IT, half the battle is just having the right tools. But if you can't provide the proper business metrics, chances are a third-party service provider will make an internal IT organization look bad.

Before the recession, IT organizations used to do budgeting annually, or if pressed, quarterly. But now that rolling budgets have become the new normal in corporations around the globe, IT organizations need a dynamic way to not only track how dollars are allocated, but also to wrap a value around the services the IT organization provides.

According to Jeff Day, director of marketing, Apptio's IT budgeting tools are designed to not only manage the budget, but define the real total cost of ownership for IT. For example, Apptio now allows IT organizations to use the same information in the budget to manage chargebacks to individual business units for IT services. Of course, after determining the cost, IT organizations will also need tools to evaluate how those applications might perform in the cloud before actually installing them on someone else's server infrastructure.

But the whole idea behind Apptio's new services, said Day, is to create a platform that allows IT organizations to more easily manage IT in the enterprise in a way that also allows IT executives to demonstrate the real value of any given service at any given moment.

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