The cloud TCO nobody puts in the spreadsheet

When someone asks me about cloud total cost of ownership, the conversation usually starts with a spreadsheet. 

How much is the compute? How much storage? How much networking? What does the monthly bill look like? 

All important questions. But there is one problem with that approach: the spreadsheet usually measures infrastructure, not ownership. 

And ownership has a lot more line items. 

Think about what happens when an organization owns its own infrastructure. Someone has to manage the hardware. Someone has to negotiate maintenance agreements. Someone has to deal with vendors. Someone has to manage VMware. Someone has to plan upgrades. Someone has to deal with firmware, patches, capacity, backups, networking, connectivity, compliance audits and hardware failures. 

And, of course, someone eventually gets the 2:00 a.m. phone call. 

None of that shows up as “compute cost.” But it is absolutely part of TCO. 

Cloud TCO isn't 100% infrastructure 

I've started thinking about TCO a little differently.  

Instead of asking, “What does the infrastructure cost?” ask: “What percentage of my IT organization's time is actually being spent creating business value?” 

Imagine, for the sake of argument, that only 50% of the effort associated with an infrastructure environment is actually the infrastructure itself. The other 50% might look something like: 

• Vendor management 
• Hypervisor management 
• Hardware lifecycle management 
• Infrastructure support 
• Backup management 
• Network management 
• Connectivity 
• Compliance and audit support 
• Capacity planning 
• Maintenance agreements 
• Hardware refreshes 
• Rack and stack 
• Troubleshooting 
• After-hours support 
• Coordinating multiple vendors 

The exact percentages will vary by organization. That's the point. 

The percentage is less important than the question: How much of your IT budget and talent is being spent keeping infrastructure running versus improving the business? 

That’s where the TCO conversation starts to get more interesting. 

The hidden TCO of “we already own it” 

One of the most common arguments against moving infrastructure to the cloud is simple: “We already own the hardware.” 

That may be true. But you also own the responsibility that comes with it.  

The server doesn’t care that the depreciation schedule says it’s paid for. The hypervisor doesn’t care that the hardware is fully depreciated. The business doesn’t care that the maintenance contract expired. And the application owner definitely doesn’t care that the infrastructure team is waiting six weeks for a replacement component. 

There is a difference between owning infrastructure and owning an outcome. 

SaaS figured this out a long time ago. Organizations don’t buy Salesforce because they want to become experts in CRM infrastructure. They don’t buy Microsoft 365 because they want to manage Exchange servers. They are buying an outcome. 

Cloud is increasingly moving infrastructure in the same direction. 

The IT skills we should actually be investing in 

IT organizations are being asked to do more, often with the same people. AI initiatives are moving from experimentation toward actual business outcomes. Automation is becoming more important. Data is becoming more strategic. Security threats continue to evolve. And the business wants technology to move faster. 

Against that backdrop, it’s worth asking whether managing another hardware refresh is really where you want your best IT people spending their time. 

Will learning another hypervisor create a competitive advantage? Will becoming an expert in hardware supply chains improve revenue? Will negotiating another infrastructure maintenance agreement make the company more competitive? 

For many organizations, the greater opportunity may be elsewhere. If your team is going to build new skills, you may get more value from investing that time in AI, automation, data engineering or other capabilities that directly support business priorities. 

Infrastructure should increasingly be the thing that enables those initiatives, not the initiative itself. 

The infrastructure equation is getting more complicated 

Infrastructure teams are navigating increasingly complicated vendor ecosystems. VMware customers have had to respond to changes following Broadcom’s acquisition. Organizations are evaluating VCF upgrades. Hardware supply chains remain a consideration. Data center capacity and colocation availability matter. And every infrastructure refresh can create another multi-year commitment. 

None of these things are inherently bad. They’re simply more responsibilities competing for the same IT resources. 

The question isn’t whether your team can manage all of this. In many cases, they can. 

The better question is whether they should have to. 

Why VMware Cloud can be a smart middle ground 

For organizations that already run VMware, cloud doesn't necessarily mean throwing everything away and starting over. 

In fact, sometimes the smartest cloud strategy is the least disruptive one. 

If your team has been running VMware for years, the software is already familiar. Your administrators understand it. Your applications understand it. Your operational processes understand it. 

So, why introduce a new hypervisor simply because you're changing where the infrastructure runs? 

Changing hypervisors isn’t inherently a competitive advantage. Moving workloads to a cloud platform where a provider takes responsibility for the underlying infrastructure, hardware lifecycle, facilities, maintenance and many day-to-day operational tasks can be. 

That approach can allow organizations to preserve familiar skills and operating models while changing who carries much of the infrastructure responsibility. 

And that’s a very different cloud TCO proposition. 

The real cloud TCO question 

The next time someone builds a cloud TCO spreadsheet, I’d add a few more rows. 

What does your infrastructure team spend managing vendors? What does it cost to manage hardware and maintain the hypervisor? What does it cost to support the infrastructure 24x7? 

What does compliance cost? Backup management? Downtime? A hardware refresh? 

What does your IT organization’s time cost? 

And perhaps the most important question: 

What could your team be doing instead? 

Because the most expensive infrastructure isn’t necessarily the infrastructure with the highest monthly bill. It might be the infrastructure that consumes your best people without creating a corresponding business advantage. 

Cloud TCO isn’t just about what you pay for infrastructure. 

It’s about what you pay to own it. 

And increasingly, that may be the number worth putting at the top of the spreadsheet. 

Want to rethink what infrastructure ownership looks like for your organization? A Flexential Fast-Track Cloud Assessment can help you understand what your infrastructure is really costing, identify opportunities to reduce operational burden, and determine the right path forward. 

Get started with a Fast-Track Cloud Assessment.