The five hidden costs are the cost of bringing services back in-house due to regulatory change, such as enactment of stricter data privacy laws; cost of implementing and operating countermeasures to mitigate risk; unexpected expenses involved in initial migration of systems; loss of internal IT knowledge providing competitive differentiation; and lock-in with a specific cloud provider or proprietary service model, which may slow down future adoption of open standards-based services.
To avoid these hidden costs, ISACA offers the following tips for companies to make informed decisions about the long-term costs and return on investment (ROI) of cloud computing.
- Companies should balance the need to be accurate with the need to reach a decision. An overly complex ROI calculation can make it hard to understand why a decision was made or measure its effects.
- The cloud is not right for every organizational need. The type of cloud service selected and the decision to use cloud computing services depend on the specific enterprise’s risk appetite.
- ROI is a good start, but other financial indicators should also be calculated. ROI coupled with total cost of ownership, net present value, internal rate of return, or payback period will provide a more accurate financial picture across the life span of the cloud investment.
- It is easier and less costly to change a decision when it is still on the drawing board. The time an enterprise spends considering the ROI of various options and selecting the best fit for its needs is time well spent.