From Drue Reeves and Daryl Plummer at Harvard Business Review:

"For companies, cloud computing's new economic model stands in stark contrast to the traditional economic model of IT where we buy technology from a vendor as a capital investment and continue to invest in maintaining and servicing it over time. Traditionally, much of the money allocated to technology has been locked away in capital expense allocations used for buying physical goods. However, cloud services are just that, a service, and require reallocating money to operating expense budgets. This can be a big change when your company must still pay to maintain existing infrastructure. It may even mean that new lines of expenditure must be created if cloud services don't replace existing services. (And you don't need us to tell you how hard it is to create new lines of expenditure.)"

Drue and Daryl make a great point about the change from capital to operational budgeting when transitioning to the cloud.  This is something that is often overlooked and can haunt you if the right financial planning isn't done in advance.

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