Cloud Computing Cost Benefits Evaluation_fhaq

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Fazale M. Haq



Overall Objectivesy Faster Scalability

y Reduce upfront investment costs

y Save IT expensesy Improve reliability and availability of systems

y Increased mobility

y Focus on business



Optionsy Software as a service

y The vendor delivers the application through the internetto customers who are signed up for the same application

y Utility computingy In this type of cloud computing businesses can sign up

with vendors that offer storage and virtual servers ondemand

y Web servicesy This type of cloud service allows developers in your

business to write applications that utilize APIs that areavailable as a web service



Optionsy Platform as a service

y This type of cloud service allows a business to deliver

applications to their clients using the servers providedby the cloud service provider

y Managed service providers

y This type of cloud service provides an IT department

with services such as monitoring servers, checking for viruses in corporate emails, anit-spam and desktopmanagement



Evaluation processy Identify security, compliance, licensing, monitoring

and data privacy requirements

y

Evaluate:y Hardware, bandwidth costs

y Utilization/ depreciation costs of assets

y Energy costs

y Building redundancy costs

y Security costs

y Payroll expenses and

y Indirect costs such as opportunities lost because the ITinfrastructure was not scalable soon enough



Evaluation processy Compare costs with different vendors and use their

tools



Evaluation processy Compare costs with different available options. For

e.g.,

Internal ITManaged

Services

The Cloud

Capital Investment $40,000 $0 $0

Setup Costs $10,000 $5,000 $1,000

Monthly Services $0 $4,000 $2,400

Monthly Labor $3,200 $0 $1,000

Cost Over 3 Years $149,000 $129,000 $106,000



Evaluation processy Some costs benefit analysis methods:

y Net present value (NPV) is calculated as each cloud

scenarios discounted net benefits minus the cloudsdiscounted one-time investment costs

y Benefit-to-cost ratios (BCR) is calculated as each cloudscenarios discounted net benefits divided by itsdiscounted investment costs

y Discounted payback period (DPP) reflects the numberof years it takes for each scenarios accumulated annualbenefits to equal its total investment costs



Evaluation processy Example: A company evaluation based on using a

public cloud VS in house cloud or hybrid model:



Referencesy Cloud Computing: Key Considerations for Adoption. (n.d.). Infosys.

Retrieved June 3, 2010, from http://www.infosys.com/cloud-computing/white-papers/pages/index.aspx

y Knorr, E. (n.d.). What cloud computing really means. Businesstechnology, IT news, prod uct reviews and enterprise IT strategies -InfoWorld . Retrieved June 3, 2010, fromhttp://www.infoworld.com/print/34031

y Reese, G. (2009). C loud Application Architectures: Building Applications and Infrastr ucture in the C loud (Theory in Practice(O'Reilly)). Sebastopol: O'Reilly Media, Inc..

y The Economics of Cloud Computing. (n.d.). Booz Allen Hamilton: AStrategy and Technology C onsulting Firm. Retrieved June 3, 2010, fromhttp://www.boozallen.com/publications/article/42656904

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Cloud Computing Cost Benefits Evaluation_fhaq