Although this series is about the payback of migrating to the cloud, not every aspect of moving to the cloud will save money standing alone. In certain situations, the software costs can be greater in the cloud. The main drivers of increased software costs in a cloud environment are the virtualization software and the service management software.

Each consolidated system will require a license for virtualization software and additional service management software. These costs are partially offset by the reduction in the number of operating system licenses, due to the fewer number of systems.

As shown in the chart above, the software costs generally increase but the overall percent increase is typically a small single digit percentage. When compared to the overall savings achieved in other areas, this software cost is not significant.

For example, in the case of a medium-sized banking customer, the client already had a virtualized environment established, so they would be able to further reduce the number of virtualization licenses when they move to a cloud environment, therefore their software costs were reduced. The other two customers did not have virtualized environments at the start, so their software costs increased.

Software Metrics and You
You know that transitioning to the Cloud can directly affect the bottom line of your IT costs. Every blog post, every article, every hashtag surrounding the Cloud says “it’s cheaper, it’s cheaper, #itscheaper.” What most articles won’t admit is that certain metrics could be negatively impacted in a cloud migration strategy. This 5-part series explaining payback includes the possibility that your software costs could increase, but this potential setback is much smaller than the prospective savings overall. Do you want to learn more about the software metrics of your EAaaS payback? Download the white paper here.