Google Cloud Digital Leader Practice Exam

When comparing the total cost of ownership (TCO) of cloud versus on-premises, which on-premises cost is vital to include?

1. The cost of on-premises operational overhead

2. The initial investment cost of on-premises hardware

3. The maintenance cost of replacing on-premises hardware

4. The cost of on-premises hardware investment, operational overhead, and missed-opportunity costs

The correct answer is: The cost of on-premises hardware investment, operational overhead, and missed-opportunity costs

In evaluating the total cost of ownership (TCO) for cloud versus on-premises solutions, it is crucial to encompass all relevant costs associated with the on-premises infrastructure. Option D stands out because it includes the cost of on-premises hardware investment, operational overhead, and missed-opportunity costs. The initial investment cost of hardware is an essential component since it represents the upfront capital required to establish the infrastructure. Operational overhead encompasses ongoing expenses associated with managing and maintaining the physical resources, such as staffing, utilities, and facility management. Missed-opportunity costs refer to the potential revenue or savings that could be lost by not choosing a more flexible or scalable cloud solution, which is particularly significant in a rapidly changing technological landscape. By incorporating all these elements, a comprehensive understanding of the complete financial impact of maintaining an on-premises environment emerges. This holistic view enables organizations to make more informed decisions when evaluating whether to migrate to the cloud or maintain their current infrastructure. Thus, including all these costs provides a clearer comparison with cloud solutions, which often offer different cost structures and benefits.