Ok time for the rubber to hit the road.  Many of you may find that you have little if any idea of the cost of IT today, no problem.  If you're beyond that, perhaps it's embodied in a report from accounting based on all the expenses you tagged with cost codes, good start.  If you're really out there, maybe you build on accounting information with a financials application or spreadsheet that you use to combine a forecast, budgets and monitor actuals.  Whatever your situation, we'll go from zero or somewhere in the middle to 60 here.

Find Your Information:

Collect all the costs of IT including software, hardware, human resources, data centers and anything else you can find.  Go back three years if possible since that should catch any CAPEX or one time purchases your forgot about.  If you made purchases using loans, don't forget to include the interest on the loans.  If you built your own data center, don't forget to put some placeholder for the cost of that building whether a standalone data center or an otherwise usable room in your office. If its in your office, make sure utilities and maintenance are included.

Key points:

A)  If you are working off of paper, electronic documents, etc...this may feel a bit like a stuck progress wheel with a bad Internet connection.  Take it easy on round one to get the concepts right.

B) If you are lucky enough to have all this information in Accounting Software, start your dialog early with the finance team so they understand your goal.  Chances are you will need an open dialog for updates until you get the model sorted out.

Categorize Your Information:

Separate or tag the amounts by Software, Platform, Infrastructure and Resources.  It's fine to lump data centers into Infrastructure or split out a new grouping if you like.  Depending on what you started with for historical information, you may have tagged these with Cost Account Codes for Expense, Cost of Goods Sold (COGS), Interest, Depreciation, etc...this is fine, we can use all this later.

Key Points:

A) If you have the luxury of historical accounting information in a database and the ability to tag the accounting software transactions by class or items, then see if your financial team will work with you to assign the tags in the software.  This is common functionality they may not have needed before.  At a minimum this will later allow you to spit out a Financial Report for update purposes if not automate this altogether.

Create Your Model:

Assuming you don't have a magic bullet in your accounting software, create a spreadsheet workbook something like the one below. If you have a magic bullet, call me.

Key Points:

E) If you have Cost Account Codes, add a reference column for these.

Populate Your Model:  

Start populating the Actuals column with whatever costs you have handy.  It does not matter right now if the costs are for 3 years, 1 year, quarterly, or monthly.

Key Points:

A) Reference the NIST Cloud Definition service deliver models.  Resources is not a category in the definition, but you will need to put this as its own grouping, or include resources within the SPI groupings.

B) Put the entire amount, including taxes, shipping, handling, services, etc.

C) Put the Amortization period in months, for example 36, 12, 3, 1.

Amortize Your Information:

Once it's all populated, put a formula in the Amortization Monthilized column that divides the Actual by the Amortization Period.

That's it for now.  Still waiting on the AEC Industry part?  No worries, we'll slump test all sorts of AEC Industry offerings soon.  Take a breath, have a good week and I'll see you shortly for Part 4/7: Evaluating Cloud IT costs.