The Costs of the Cloud: Double-Check Me on This, Would You?

For the past few months, I’ve been working with Google and Analysis Group on a project to understand the comparative costs of cloud vs. on-premise computing. As I wrote in Harvard Business Review last fall, I believe that the cloud will eventually become the status quo for most types of corporate computing, in part because of cost advantages stemming from massive scale efficiencies.

But that doesn’t mean that the cloud is cheaper now, or that it’s currently the cost-effective choice for young and small companies. We wanted to find out if it was, so we built a relatively straightforward model of the computing costs facing different such companies, and used it to project cloud vs. on-premise costs under various assumptions and scenarios.

We don’t know of any other model that’s built from the bottom up like this one is, and that tries to be comprehensive — to incorporate all significant IT cost categories. We don’t try to model any productivity or revenue increases as a result of moving to the cloud here; we’re just after comparative costs.

Now it’s time to subject that model to some good old-fashioned peer review. I’d really appreciate it if you and/or the sharp-eyed geeks you know would take a look at our model and let us know if we’ve missed anything important, or if you find any of our parameters or assumptions hugely off base.

The model itself is here. Please feel free to play with it, examine its inputs and assumptions, and poke at it in any and all ways you’d like. The ‘Start Page‘ tab explains a bit about how it works, the ‘Summary‘ tab lets you enter your own parameters and compare total Cloud vs. on-premise costs, and other tabs contain further explanations, cost assumptions, and so on.

A form to collect your feedback is here; please use it to tell us what you think, and how the model can be improved (you can also leave a comment here, of course).

Thanks in advance for taking a look and letting us know what you think.