Build the Business Case for the CoE

Create a strong business case to drive senior level sponsorship, align expectations, and provide a solid foundation for cloud adoption for your EPM CoE.

The business or IT sponsor of your cloud adoption initiative, in partnership with an executive sponsor, is in the best position to lead the creation of a business case. To create a business case that can be implemented successfully, it's important to get input from subject matter experts in your organization who have an in-depth knowledge of the people, processes, and technologies that will be affected by your cloud adoption initiative.

Use the goals that you defined previously to build a business case for cloud adoption. The business case starts with prioritization of your goals, including key performance indicators (KPIs). By prioritizing and quantifying your business goals, you economically validate the goals in relation to the technical, human, and financial investment that is required.

The business case should include an analysis of the economic impact of your cloud transformation. It should also include a return-on-investment analysis, which provides a comprehensive description of the required investments and the expected outcomes.

The following table summarizes the key aspects to capture in your cloud adoption business case.

Table 2-4 Business Case for the CoE and Areas for Analysis

Elements of a Business Case	Areas for Analysis
Executive summary (1 page maximum)	What is the goal of cloud adoption?
	What is the business value of your cloud adoption initiative?
	What resources and investments are needed?
	When will the benefits be seen?
	Tip: The executive summary should appear at the beginning of the business case document. While you draft the document, however, it might be easier to write the summary after including the other information.
Prioritized goals	Goals and KPIs
Cloud technology adoption strategy	Examples: Technical solutions: Migration of the application portfolio Modernization of the application portfolio Application innovation
Financial details - total cost of ownership (TCO)	Financial investments needed: Cost to migrate IT operations to the cloud or to switch providers Labor, consulting services Cloud platform services Integration Training and workforce readiness
Benefits - return on investment (ROI)	Benchmarking, including current environment compared with cloud environment Financial benefits: Capital cost of equipment and facilities compared with cloud pricing structure Current labor compared with cloud labor Physical maintenance cost compared with cloud services Operational costs Integration costs Training costs Security and compliance Modernized technology stack Simplified or improved operating environment Competitiveness Technical benefits: Reduced data center footprint Operational expense (OPEX) consumption model Improved productivity Scalability Security and compliance Availability, business continuity, disaster recovery
Human resources needed - resource management strategy	Executive sponsors Key stakeholders Implementation team: Finance, business, and IT Business sponsors Architects Developers Operations
Cloud adoption plan	Identify the specific applications to migrate and build in the cloud: Legacy applications Lift and shift applications Modern application development (cloud-native) Interface analysis and integration analysis
Cloud adoption process	Enterprise architecture Governance process for creation and update Security process for creation and update
Estimated timelines	Implementation Value realization
Recommendations	How should your organization proceed with its cloud adoption initiative?

Total Cost of Ownership: Quantifying the Investment

Evaluating the total cost of ownership (TCO) will ensure that your organization is prepared to shift to a cloud-based OPEX model, or to evolve from an on-premises IT procurement process to a cloud-based investment model. Moving to the cloud, you no longer have expenses for assets like servers, data centers, and so on. TCO is the sum of all costs that are involved in the purchase, operation, and maintenance of an asset during the asset's lifetime. A TCO analysis can help your organization understand the cost of an asset beyond its initial purchase price, and is useful for understanding return on investment. Determining the right systems, services, and infrastructure is important for building a solid business case.

In the context of cloud computing, TCO is the overall cost of setting up, operating, and maintaining your resources and applications in the cloud. When creating a TCO analysis for cloud infrastructure, use your current and predicted usage as a baseline, but also understand that the cloud is an inherently dynamic ecosystem and your organization's future costs will respond accordingly.

When organizations calculate cloud TCO, they often make a like-to-like comparison between the costs of running on-premises workloads and the cost of running the same workloads in the cloud. Organizations compare the initial purchase price of hardware and software in an on-premises environment to the monthly subscription cost of cloud computing.

Adopting a cloud solution can provide intangible benefits such as increased agility, faster time to market, increased productivity, and a cost-effective response to elastic demand.

A TCO analysis is unique to each organization. Depending on your needs, you can choose to perform a comprehensive cost analysis or focus only on the areas that are most important to your organization. The following table includes some common costs to consider in your analysis.

Table 2-5 Cost Areas and Examples for TCO

Cost Area	Examples
Compute	Servers, rack chassis power distribution units (PDUs), top-of-rack (ToR) switches, maintenance
Storage	Storage disks, fiber channel storage area network (FC SAN) switches, maintenance
Networking	LAN switches, load balancers, bandwidth costs, maintenance
Facilities	Space, power, cooling, maintenance
Security	Firewalls, network domain security (NDS), intrusion detection systems (IDS), maintenance Software Licenses, renewals, upgrades
People	Hiring, training
Disaster recovery	Alternate sites, idling infrastructure
Migration	Rehosting, refactoring, revising, rebuilding, replacing
Opportunity costs	Potential value of eliminating capital expenditures Potential value of increased agility Potential value of faster time to market Potential value of increased productivity