Cloud Budget Considerations and Cost-benefit Analysis

budget-considerations

It’s that time of year again when budget numbers are flying around and 2020 cost estimates get debated, shot down, reduced or approved. 

CPA firms that are looking to upgrade their existing cloud ecosystem, or migrate to a cloud-based IT solution for the very first time, have a two-pronged challenge: first, those leading the charge for 2020 budget allocations need to understand cost categories, and second, they need to be able to sell the budgetary expenditures to get buy in for these IT upgrades from those holding the proverbial purse strings. Identifying the cost buckets and being able to make a persuasive cost-benefit argument are critical to securing ample budget allocations to make your IT infrastructure more efficient, more productive and more secure.

Let’s take a look at key cloud expense categories and why they’re important while also exploring factors that can help you craft your argument to get finance and procurement to sign off on what you need. 

Storage Requirements

CPA firms and the financial industry as a whole are subject to strong regulatory oversight when it comes to document management, akin to other industries like healthcare. Understanding what your current data storage needs are in the context of these regulations, and allowing for scalability for near-term and future growth, are important cost considerations when constructing your cloud/IT 2020 budget. An audit of your data that generates an accurate data map is a useful tool for understanding what you have to store and what you might need to retain in the future. 

Once you have a sense of your data landscape and how that might shift in the future, you can project your storage requirements. Now that you are informed about your needs, you can work collaboratively with your current cloud provider or a prospective provider to find savings and efficiencies like creating a tiered storage infrastructure for various data types. 

Number of Users

Cloud pricing can be complicated and difficult to estimate. Per-user pricing models can be complex and convoluted, depending on the quality, experience and transparency of your cloud hosting provider. Typically, there are two pricing models, one that factors in a per-user cost and another that rolls all costs up into a flat monthly fee. 

If your current or potential cloud provider offers a per-user model, you and the CPA firm staff leading this project will need to work closely with other departments, including human resources, to identify projected user needs for both current and future users. You’ll need to understand your provider’s per-user pricing strata, i.e., if there are economies of scale for licensing more users now as opposed to at some future date. There are many factors to consider and calculate, all of which involve gaining a stronger sense of your existing user profile with an eye toward future user growth and scalability.

What’s more, while a flat monthly fee agreement for the cloud is ostensibly simpler, CPA firms need to be very careful about understanding exactly what’s included and what is not to avoid unexpected rate increases and add-on costs. 

Network Ecosystem Needs

Again, self-awareness is critical and lack of awareness can really hurt your cost-benefit ratio for 2020 and beyond. To accurately compile a cloud/IT budget, you and your project team need to understand what network staffing and tools you have in place, what is sufficient for the coming year, what needs to be upgraded, and what needs to be added to maximize the investment that you’re going to ask leadership to make in the coming fiscal year.

This could include costs for software licenses, new team members, new computers, API (application programming interface) development, artificial intelligence tools, and security enhancements, among other considerations. When you know your network ecosystem inside and out, you can collaborate more effectively with your current or new cloud services partner, and, perhaps of equal importance, you can make a persuasive argument to key decision makers for the budget dollars you need. 

Cloud Management and Oversight Services

It’s well established that CPA firms of all sizes, even those with small to midsize IT teams, are wise to partner with a seasoned cloud hosting and services provider to complement in-house capabilities. Security threats, software patches and updates, and a variety of other fast-moving factors make it extremely difficult for CPA firms to keep pace using in-house, hardware-driven networks and overworked and overwhelmed IT teams eternally stuck in break-and-fix mode. 

When budgeting for the coming year, calculate costs for a cloud services provider rendering essential services to keep your network secure, running smoothly and monitored 24/7/365. If you have an existing cloud partner already, work with them to determine the pricing for the new year given any upgrades you’ve made and any cost-saving methods you’ve identified. 

Being transparent and upfront with your cloud provider, and, in turn, earnest and accurate in your budgetary “asks” from leadership while making a persuasive cost-benefit argument will increase the likelihood you get the IT/cloud cash you need.

Debunking the Cloud is Too Expensive Argument

When arguing for cloud/IT upgrades with your CPA firm’s decision makers, price will always be an issue. That’s just reality. However, costs should never be presented in a void; being able to deftly argue and persuade C-suite budget guardians with cost-benefit data and concrete results is key. Presenting clear benefits and positive outcomes will soften the price issue, letting the default, programmed “no” transform into a “yes” that’s justified. Your goal is to make it easy for your CPA leadership to say “yes.”

Showcasing What the Cloud Can Do

The cost categories listed above in addition to the cost-benefit analysis argument laid out in the video will help you accurately project 2020 budget costs while making it easy for C-suite leaders to say “yes.” 

In the event that you don’t have your own data to showcase, we’ve also got you covered. Check out a recent client success story that we’re happy to share with you as you formulate your 2020 budget planning approach. 

Click the button below to read more about how a CPA firm cashed in on increased productivity and reduced downtime by using the cloud. 

Read Our Case Study