Measuring Efficiency of Cloud Computing

8/19/2019 Measuring Efficiency of Cloud Computing

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Using ROI of CC


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Cloud Computing is a model for enablingconvenient, on-demand network access to ashared pool of configurable computingresources (e.g., networks, servers, storage,applications, and services) that can be

rapidly provisioned and released with minimalmanagement effort or service providerinteraction.

This enables users to avoid over-provisioning

and under-provisioning, to improve cost,revenue, and margin, and to provide newbusiness services based on new ways ofoperating.


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The ability to create the illusion of infinite

capacity Abstraction of the infrastructure Pay-as-you-go usage of the IT service The service is on-demand; able to scale up

and scale don ith near instant availability Access to applications and information from

any access point! The rate of change and magnitude of cost

reduction and specific technical performanceimpact of Cloud Computing are not "ustincremental# but can give a five to ten timesorder of magnitude improvement!


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The famous graph used by Ama$on %eb &ervices illustrating thecapacity versus utili$ation curve has become an icon in Cloud

Computing!


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one of the core precepts of Cloud Computing is

to avoid the cost impact of over-provisioning andunder-provisioning! This is in addition to theopportunity for cost# revenue# and marginadvantages of business services enabled by rapiddeployment of Cloud services ith lo entry

cost# and the potential to enter and e'ploit nemar(ets! )atching capacity and actual utili$ation on

demand improves operational efficiency#Capacity and utili$ation are *ey Performance

Indicators +*PIs,! They measure ho much orho little something is being used! ut is thisaligned and being used to generate Return onInvestment +ROI,.


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Race to the ottom versus /uality of &ervice

+/o&,0 The positioning of Cloud Computing#hile initially seen as a disruptive technologyinfluence on both buyer and seller prospects#is no evolving into a trade-off beteen lo-cost arbitrage and added value /uality of&ervice +/o&,!

)assively scalable services from CloudComputing providers have the effect of

driving don costs and prices# as thedynamics of competition are shifted by thepresence of potentially rapid cost reductionsand huge data center investments!


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The central theme of this Paper is ho to gobeyond the initial capacity and utili$ation benefits

described in Cloud Computing! The vie of capacity and utili$ation is a technology

provider1seller viepoint hich is essentially basedon (ey performance indicators +*PIs, rather than

business benefit metrics! IT capacity # as measured by storage# CPU cycles#

netor( bandidth# or or(load memory capacityis an indicator of performance!

IT utilization# as measured by uptime availabilityand volume of usage is an indicator of activity andusability!


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The speed and rate of change of cost reduction

can be much faster using Cloud Computing thantraditional investment and divestment of ITassets! In Cloud Computing the buyer can movefrom a one model to another model throughpurchasing the use of the service rather thanhaving to on and manage the assets of thatservice! This responsibility is transferred to theservice provider!

The cost of change in an ROI business case is less

in Cloud Computing as the choice of selectedCloud services is more stable and more cost-effective than traditional onership!


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2eveloping ROI models that sho ho Cloud Computing

adoption can benefit both business and IT consumers andproviders involves e'amining the (ey technology featuresand business operating model changes!

*ey Performance Indicator ratios that target CloudComputing adoption# comparing specific metrics oftraditional IT ith Cloud Computing solutions! These havebeen classified as cost# time# 3uality# and profitabilityindicators relating to Cloud Computing characteristics *eyReturn on Investment savings models that demonstratecost# time# 3uality# compliance# revenue# and profitabilityimprovement by comparing traditional IT ith CloudComputing

*ey Return on Investment savings models that demonstratecost# time# 3uality# compliance# revenue# and profitabilityimprovement by comparing traditional IT ith CloudComputing


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Cloud Computing is an important stage in thedevelopment of IT systems# comparable ith the

emergence of the mainframe# the minicomputer#the microprocessor# and the Internet! Cloud Computing can provide many advantages

over conventional approaches to IT provisioning#hich can translate into significant improvements

in ROI! ut hat ma(es it particularly e'citing isthat its potential effect on business is not "ustincremental improvement# but disruptivetransformation through ne operating models!

This Paper provides an analysis of ho to build and

measure ROI that ill help businesses to reap thebenefits of Cloud Computing# and ta(e advantageof its potential for incremental improvement anddisruptive transformation of business processes!

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Measuring Efficiency of Cloud Computing