One of the most compelling values of cloud computing is that CIOs don’t have to justify hefty capital expenses for cloud IT. Nor do they have to pencil on-premises hardware and software into an asset depreciation plan that spans three or five years as they arm wrestle with the CFO over next year’s budget. Instead, cloud services can be nicely factored into operating expenses. If these cloud services are of an on-demand nature, they can even be terminated at will if budget dollars must be saved or cut. As a result, companies are using cloud services alongside on-premises computing in their IT.

SEE: Research: Hybrid cloud – deployment, drivers, strategies and value

Now imagine that you could extend this kind of hybrid cloud thinking into a hybrid cloud financing scheme that supports both on-premises and cloud-based work, enables you to freely move data and applications back and forth between these two extremes, and lets you pay for it all though operating expenses. At first glance, it seems impossible. Reserving capital for purchases of on-premises equipment and software and paying by subscription or per-use for the cloud seem mutually exclusive from a financial standpoint. Nevertheless, there are conversations going on inside the walls of major IT vendors that are focusing around pricing strategies that enable companies to subscribe or pay on demand for resources that can be either cloud or on premises–with no need to toggle between capital budgets and operating budgets.

How does it work?

With this model, you pay per-use or by subscription for the on-premises system in the same manner that you pay for its counterpart cloud solution. In essence, you are renting the on-premises system–and if you later choose to move your data and applications to the cloud, you can do so without any change in how you are paying. Conversely, if you decide that the cloud is not the ideal host for your application, you can move the app back onto the on-premises platform, continuing to pay per-use or by subscription. Either way, the expenses flow through your operating budget and you don’t have to worry about getting locked into long-term capital funding and asset depreciation for on-premises equipment.

SEE: Year-round IT budget template

The possibilities that are created with a move to hybrid cloud pricing bring relief to CIOs who can now more flexibly promote budgets and manage expenses. But it also has a transformative effect on IT that CIOs need to plan for and manage. Here are several key points to consider.


A well-architected IT infrastructure that enables the shifting of applications and data to the cloud, back to on premises, and back again is a necessity. You can bring in a qualified consultant to develop the architecture, but within a short period of time you must be able to transfer these skillsets to resident staff so you can be self-sufficient in managing your own environment.

Resource expenditures

Major demands for on-premises resources, such as reserving databases for application development and testing, can now be done in the cloud, with the finished applications moved into production either on cloud-based or on-premises platforms. If both choices are subscription-based, resource expenditures should be equivalent–and you’ll have the opportunity to “green up” the IT in your data center by moving more work to the cloud.

Vendor selection

You must find vendors you can trust for the long term who provide the types of systems and solutions that you need for your business and that have cloud and on-premises security and governance and flexibility that meet your needs.

SEE: Power checklist: Managing and troubleshooting cloud storage

Disaster recovery and business continuity

Being able to adroitly shift systems from on-premises computing to the cloud and back will make system replication and disaster recovery easier and faster.

The payoff

Wherever you decide to place applications and data, deployment with hybrid cloud pricing will be malleable and highly adaptable to changing circumstances. This is the kind of flexibility that CIOs look for.