InfoWorld's Woody Leonhard uncovered the fact that Microsoft is paying some organizations to adopt its Office 365 cloud service, mostly in funds that Microsoft earmarks for their customers' migration costs and other required consulting. Although this raised the eyebrows of some bloggers -- and I'm sure Google wasn't thrilled -- I think this is both smart and ethical. Here's why.
Those who sell cloud services, which now includes everyone, often don't consider the path from the existing as-is state to the cloud. If executed properly, there is a huge amount of work and a huge cost that can remove much of the monetary advantages of moving to the cloud.
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Microsoft benefits from subsidizing the switch because it can capture a customer that will use that product for many years. Thus, the money spent to support migration costs will come back 20- or 30-fold over the life of the product. This is the cloud computing equivalent to free installation of a cable TV service.
The incentive money does not go into the pockets of the new Office 365 user; it's spent on consulting organizations that come in and prepare the organization for the arrival of the cloud. This includes migrating existing documents and data, training users, creating a support infrastructure, and doing other necessary planning and prep work.
Others should follow Microsoft's lead, and some cloud vendors are doing so already.
As a rule of thumb, I would allocate about one-eighth of the first year's service revenue to pay for planning and migration costs. If it's a complex migration, such as from enterprise to IaaS (infrastructure as a service), I would budget more. Budget less if you're dealing with a simple SaaS (software as a service) migration.
Migrating to cloud computing requires effort, risk, and cash. Although the end state should provide much more agility and value, many steps separate where you are and where you need to be. Considering that the cloud providers like Microsoft, Amazon.com, and Google will benefit directly from our move to their cloud services, let them pay us to get there.
This article, "Why Microsoft's 'cloud bribes' are the right idea," originally appeared at InfoWorld.com. Read more of David Linthicum's Cloud Computing blog and track the latest developments in cloud computing at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.