Page 142 - Cloud Essentials

may or may not be able to increase the service volume (be it servers,

accounts, or whatever) when that need arises. Some providers have
facilities to hedge this risk. For a fee, the customer can make reservations of
capacity. Generally, without financial commitment from the customer, there
is not likely to be much commitment from the provider.
From the viewpoint of a financial controller or chief financial officer, the
move from internal IT to public cloud computing represents a reduction of
capital on the balance sheet. This might take a while to play out because
assets depreciate over the years. Depending on the financial situation of the

organization, this reduction of capital may be a good thing.

Capital expenditure (CAPEX) reduction and the increase in operating

expenses (OPEX) are sure to show up somehow on the exam. The
reduction in CAPEX on IT services allows a business to either save
money up front or use that capital to benefit the business in other ways.
Bear in mind that the benefit of migrating CAPEX to OPEX might not

be realized immediately.

With cloud computing, there is an increased volatility in the cost base.
Costs will go up and down more often and more rapidly. This puts greater
demand on financial management capabilities.

CERTIFICATION OBJECTIVE 6.03

Understand How to Maintain Strategic Flexibility

From the perspective of the cloud customer, there are clear and present risks
such as a provider going out of business or being unavailable across the
network. You must have a contingency plan to deal with these potential
incidents.

Exit Strategy
One of the fundamental risks in cloud computing is that the vendor either
goes out of business (that is, goes bankrupt) or decides to no longer serve
the customer well enough. Although this situation is also well known in the

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