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The First Step To Cloud Cost Savings? An IT Infrastructure Audit

To know how much money you can save, you first have to calculate how much money you’re currently spending on IT.

Here’s what you already know about moving to the cloud: With the promise of reduced hardware, maintenance, facility, and labor costs, cloud adoption can save your business a significant amount of money in operating and IT costs.

But here’s what you might not know about moving to the cloud: It’s not a silver bullet.

That’s why conducting an infrastructure audit is the first thing you should do when building your cloud strategy. The audit will reveal what you’re currently paying to run IT and what your new cloud environment might look like. This baseline will help you flesh out the potential cost of the cloud resources you’ll consume. 

Having this baseline will also help you calculate the potential cost of the cloud resources you’ll consume, helping you to compare and budget them against your current cost levels.

The first thing to keep in mind is that you need to consider the total cost of ownership of your IT operations. That is, the total cost of using and maintaining your on-premise IT investment over time, and not just what you pay for infrastructure. Typically, this will include direct and indirect costs.

Here’s a breakdown of how to audit your infrastructure. 

Direct Costs

They are the ones that you have to shell out money for every month.

These are the costs that directly hit your balance sheet. The numbers you compile for direct costs will be vital when it comes time to calculating the total cost of ownership (TCO) of moving to the cloud (we’ll hit on this in more detail later). 

The first category of direct costs are the hardware and software that make up your IT infrastructure. This includes your physical servers, software licenses, maintenance contracts, warranties, supplies, material, spare parts, and anything else that you directly pay for. You can calculate these costs by pulling invoices, purchase orders, and payment records from your accounts payable department. And while you might have to hunt down and wade through paperwork and spreadsheets, these direct costs should be relatively easy to calculate overall (as long as you’re organized). Let's add in that Finance is a great place to look for these types of costs if they seem overwhelming now. Afterall, it’s their job to record this stuff. 

You should also gain a thorough understanding of how much networking bandwidth, storage, and database capacity you consume with your servers and other technology. Taking note of the current details of your infrastructure is important here, too. This includes things like database types, number of servers, and storage capacity. 

The second type of direct costs are operational costs. These can include things like labor for maintenance of your servers and databases; facilities used to house IT hardware; internet connectivity; and any other costs that might be associated with upkeep of your IT. 

Indirect Costs
These are a little harder to calculate, but they’re just as important as your direct costs.

The largest source of indirect costs is the downtime and loss of productivity your employees and customers suffer if your IT infrastructure goes down. You can calculate these costs by reviewing log files to determine how often your servers go down and for how long. Once you’ve pulled those numbers, multiply that time by an average hourly rate.

If you can estimate the revenue your company might lose due to downtime, that should be included, too.

What's Next?

Once you’ve determined your current on-premise infrastructure costs, the next step is to calculate the potential cost of actually using the cloud. 

After you have completed your audit, you should have a good understanding of the networking, storage, and database capacity you need to run all of your company’s applications. Now, it’s time to figure out what all of that might cost to maintain in the cloud.

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