Six economic answers you need when making re-platforming decisions

by Bill Kirwin, iiie consulting

1. How much will it cost to continue as-is?

Every argument for change has to start with a baseline assessment of the IT cost ecosystem. The elements of this baseline need to include all the elements of a proper TCO assessment (Assets, Labor, Fees). This puts a stake in the ground by which success or failure of new investments will be determined. Once the baseline is established it can be forecasted over a reasonable time horizon (3–5 years). The forecast should be long enough to settle in on a stable run rate for the next generation of the workload. Note that I use “as-is” rather than “do nothing”. I believe there is no such thing as a do-nothing scenario. Even in a stable, mature state, a workload is subject to cost events like maintenance, patches, upgrade cycles, labor costs, and licensing fees. So going forward as is does not mean doing nothing. It’s important to carefully identify, plot and plan these cost changes over the extended baseline scenario.

2. Which candidate workloads to forecast?

There are two ways to identify target workloads. The first is the list of workloads already known to be at end of life. An application that cannot meet the business demands because of technical obsolescence, spaghetti-code, or other inhibitors is a clear candidate. Infrastructure that is old, fully depreciated, and high maintenance are another class of possibilities. Development platforms that don’t meet modern needs could be considered. Finally, SaaS applications that offer new functionality by the slice may be appealing for re-platforming.

3. What is the TCO of targeted workloads?

Each extracted workload should have a cost basis as a subset of the baseline. Using a BI for IT modeling process, a fully burdened TCO of the workload can be established and forecasted to the planning horizon. This becomes the new baseline for as many alternate scenarios that can be imagined. The forecast should be based on a “planning curve” of factors that will affect the TCO over time. These planning curves should be easily adjusted for both “what-if “analysis and updated as actuals are recorded.

4. What is the TCO / ROI of alternative scenarios?

In today’s IT marketplace, there are often several technical options for the next turn of the crank of a workload. Alternative scenarios might include upgrading the existing on-premise workload; refactoring and moving it to cloud, choosing a SaaS provider, etc. One of the challenges of IT comparative cost assessments is creating an apple-to-apple cost analysis. This is why I choose the workload, a generic platform agnostic common denominator.

5. What do you need to make a defensible and informed decision?

Chances are that there will be several stakeholders interested in the cost and benefits of re-platforming and upgrading decisions. Each stakeholder may have a different perspective on the decision. The business stakeholders are mostly interested in the bang and less interested in the buck. The finance stakeholders are looking for financial performance (typically ROI, IRR, NPV, payback, etc.). The IT stakeholders are mainly looking for integration, standardization, scalability, elasticity, security, and architectural fit. So the economic analysis of the workload options needs to meet all these needs. All the stakeholders are interested in risk profiles of the alternative solutions.

6. How will the solution perform over time?

Increasingly, IT investments are scrutinized over time to determine if the projected benefits are being realized. Going are the days of one-off cost analyses that are filed away, never to be viewed again. Analysis by spreadsheet is very difficult to maintain over extended periods and is often limited to the initial assumptions. With a data cube, there is much more depth of interdependencies that often harbors the gremlins and boosters of benefits realization.

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