Perspective: Cloud Economics — An Operating Leverage Analysis for Manufacturers

Perspective: Cloud Economics — An Operating Leverage Analysis for Manufacturers

This IDC Manufacturing Insights Perspective captures the analysis that has come from multiple interactions with both buyers and vendors of cloud and offers an operating leverage-based model to assist in understanding the underlying economic considerations. Unless you are part of one of the largest enterprises in the world, it is unlikely you will have the scale to compete with the cloud-based delivery of applications. The manufacturing community has come to accept this but still struggles to understand how to frame the business conversation.

Please Note: Extended description available upon request.

In This Perspective
The Concept of Operating Leverage
Applying the Model to Cloud Economics
Extenuating Circumstances
Essential Guidance
Pricing — Two-Tier Approaches Are Best for Those Already Running On-Premise
Timing — No Need to Rush, Consider Cloud Deployment in Your Normal Upgrade Cycle
Negotiating — Keep the Overall Cost in Mind
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Related Research
Figure: Classic Operating Leverage Model
Figure: Cloud Versus On-Premise: Cost Over Five Years
Figure: Cloud Versus On-Premise: Five-Year Aggregate Cost of Maintenance Multiple

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