The ROI of a Cloud Deployment

 

 

 

 

 

 

 

 

 

 

 

The ROI of a Cloud Deployment

Name

Institution

Date

 

 

 

 

 

 

 

Timeline

I.                   Introduction

II.                Identifying a cloud opportunity

A.    Assess suitability of the business needs and the positive it will cause to the society

B.     Consideration of timing and triggers

C.     Consideration of the organization capability

D.    Manage the change

 

III.             Implementing a cloud solution

A.    Establishement of a business model

B.     Assess the possible risks

C.     Capture all system requirments

D.    Reasons for step by step implementation

IV.             System testing

V.                System maintainace and security management

 

 

 

 

 

 

The ROI of a Cloud Deployment

 

Organization are ever in the rush to join the cloud for some good number of reasons. Some of the reasons that makes the many companies run for the cloud computing include: cost-efficiency and higher and outstanding application performance. Although there exist need for the migration to be effected but it should note that the process is complex and demanding. It should be handled with careful planning and deliberation. Before the actual implementation of the cloud computing, it should be analyzed and in any case determined whether it’s of good impact to the organization. The expected and extra cost should be determined and any aspect that can affects it operation such as interoperability, security gap and other important aspects that the organization should consider in order to ensure that it operates at the level it was expected to operate with the introduction of cloud computing.  Regardless of what level the company is moving from to, it should ensure that it follows the required steps and using the analysis technique it will identify whether the movement will benefit the organization or no.

Many businesses have argued for emerging trends through activities to establish cost reduction and leverage Information Technology service providers’ implementation of cloud-style services. Most industry organizations and trending are leading IT suppliers of software, hardware, and sometimes services, seeking to address their customer demands, have vigorously evaluated and implemented a cloud-style strategy. The problems and issues are in the process of transition from the current ancient IT to the new potential, powerful cloud computing. They must be expressed in a language that end users can comprehend, and relate to investment, cost improvements, or firm performance.

The Return on Investment (ROI) is perhaps the most used measure of financial ability in business.

ROI is the proportionate increase in the value of an investment over a period. It can be measured in a variety of different methods, but there are just four primary ways to improve it:

 

v  Increase revenue,

v  Minimize costs and make the return faster

v  Decrease the investment,

Using cloud computing, you can get any of the above; but you cannot achieve them all at once.

It is the relationship between the factors that counts, rather than the absolute values. If you move to public cloud, you decrease investment but increase cost. With a private cloud, it is the other way round, but it can improve or worsen ROI either way.  Depending on the company’s  revenue and speed of returning the company can implement any of the clouds computing technique. Revenue can be increased by improving the delivered features and quality – which enable a higher price to be charged – or by operating on a larger scale. But improvements in features, quality, and range also mean higher costs. You must get the balanced correct.

Just having a look at the cloud computing from a technical facilities point of view is potentially missing the wider picture of the impact of technology on the business. Overall, what matters is defining the value to business. Value can be defined in many ways. It does not just mean the financial costs, but can also mean customer value, seller value, broker value, market brand value, and corporate value. These aspects should not be neglected.

How does cloud computing contribute to ROI? Some fundamental driver’s impact on investment, revenue, cost, and timing that can be positively influenced by using cloud services. They relate to productivity, speed, size, and quality. This chapter describes how each of these drivers contributes to ROI and shows how to use them to compare cloud and traditional IT solutions, and how to monitor them to maintain and build ROI from cloud computing.

As IT tries to separate hype from reality that should exist, finding the real ROI in cloud adoption can prove elusive. Rather, a demonstrable ROI should be developed as the basis and justification of a cloud transition plan. If the regulatory approach shows whether the implementing the ROY into the cloud computing can be any advantages or it will result in more problems.

 

As IT tries to separate hype from reality that should exist, finding the real ROI in cloud adoption can prove elusive. Rather, a demonstrable ROI should be developed as the basis and justification of a cloud transition plan. If the regulatory approach shows whether the implementing the ROY into the cloud computing can be any advantages or it will result in more problems.

 

In this paper, I will evaluate a method of valuing IT resources to develop a case for cloud ROI. I will also dig into some related issues and concerns surrounding the cloud environment.

 There are as many definitions of “cloud” as there are vendors selling cloud infrastructure, but “Cloud” defines an overarching deployment architecture/strategy that uses virtualization, automation, and governance to deliver rapidly IT services meant to meet a given business needs at a specific per unit cost and relatively low price.

The basic implementations of this model depend on highly flexible resource that should always be available and at the reach of the implementing people. The cloud technique provides on-demand services from a virtualized environment, making the underlying technology transparent to the consumer. Some of the services in the cl
oud model include the software as services, infrastructure as a service and platform as services (Buyya, Broberg, & Goscinski, 2010). The cloud services are designed in such a way that it can provide both internal and external services or give individual services to the clients.  The internal services provided by the cloud are implemented by an exclusive technology referred to as ITIL service provider model and will utilize automation to quickly apply the resources that the services from the shared pool virtualize on a pay-per-use basis.

Establishing the current state costs

For a company to understand the return on investment ROI, it should start by first understanding the current situation value and then compare them to the future expenses and return expectation. From the above argument suggests that even if elements of SaaS, Paas, or the other more conventional cloud functionality of Isaac, the cost should be the first thing that should be established for the organization to identify whether implementing the technology into its premises, it will either make profits or losses. Once the total cost has been established a budget is created and the overall cost is as well understood. After that, the company should identify the full loaded cost and allocate it to every unit of the deployment process.

Most following cloud transition strategies, general trends of outsource such as the SaaS and PaaS but the insource came up later, and its primary concern was tied to the security. The cloud deployment does not take into consideration some aspects such as whether internal or external; it was only interested in the cost of the infrastructure, future cost and the implementation cost. It also takes into consideration the issues to do with security since such kind of systems are always prone to the elements of cyber-crimes and issues that can make the operation of the system come to a standstill.

With this system, the servers provided and the prices on the resources applied for are basically over some fixed period. The services provider managing establishes the services users from the external environment and usually provides a fully loaded cost which includes the wasted resources and the margin costs.

The internal service provider must follow a particular model if only to ensure its operation is and remains cost-competitive. To understand the ROI of a cloud service, whether it is internally/ externally sourced, it is essential to first know pre-cloud current state costs in the same terms as the costs presented by the cloud service vendors.

The above means IT must develop a technique of identifying two key cost components

v  the fully loaded cost of a Gigabyte (GB) of consumer-usable storage,

v  The fully loaded cost of a Gigahertz of consumer-allocated computing potential.

The establishment of the current cost of resources intended for outsourcing to SaaS or PaaS is relatively straightforward because we are typically dealing with readily identifiable and chunked infrastructure. The servers and storage involved in supporting software intended for outsourcing to SaaS tend to be easily recognizable and tend to reside on infrastructure that is not used for other purposes or is readily inventoried.

Resources designed for implementation as an internally gave out IaaS cloud are more often shared resources and are often already virtualized to some extent. The above complicates the identification process of a comparable current vs. future cost calculation. However, before the implementation progresses down that path, it should first pause to identify what is meant by a fully loaded per unit cost.

Defining a Fully Loaded Cost

Entirely full unit price indicates that we have first defined the unit of measure or the unit of deliverable resource and that we have then understood it is exact and total annual cost.

In the IaaS model, we need to know the fully loaded cost of a “configured for use” GB of storage and GHz of computing power. The cost of a GB of raw storage may be multiplied many times to arrive at a “configured for use” GB price.

Before storage can be fully put into use by an application, it need first to be allocated to a tier of service. It is these lines of service with characteristics, including disk architecture through some form of RAID, then operational protection through additional storage utilized for backup, and the addition of disaster recovery protection GB, including replication GB and snapshot GB.

 

 

 

 

 

 

It is not normally to find ratios of 10:1 to 50:1 for raw GB to “configured for use” GB. We conclude that it seems “a GB isn’t a GB, and a GHz isn’t always a GHz.”

The price of a GHz of computing power can also be subject to a multiplier based on the levels of protection appropriate for the tier of service it supports. At high-end levels, security schemes can drive a ratio of 3:1 in computing power GHz to support high availability both locally and remotely for disaster protection.

For example, 1 GHz of available computer power can require an extra GHz of computing ability for an active/active or an active/passive configuration, and any addition additional GHz for an earth-clustered remote probability.

After identifying the actual unit of deployment what should follow is the consideration of what components take a fully loaded cost. Incase IT team includes an IT financial analyst the company becomes fortunate. If not, the company may need to make good relationship with someone in Finance who will help and support in getting a practical understanding of the apparatus of a fully loaded cost.

 

To start with, there are the rather obvious purchase and lease expenses, with this cost being spread over the active life or the financial life of the hardware or software. Then, there are the ongoing maintenance costs for equipment and software. Secondarily, the company must find a way to get an average cost of IT administration duly loaded with management fees. To do this, the firm will need to get a clear understanding of what resources, and the total percentage of the resources that will be utilized in the administration of the storage and compute platform being implemented.

Next, gaining an understanding of network “per port” costs by capturing the network hardware and software costs, and line costs.  Some other extra cost that should be established is the maintenance costs and IT administration. Finally, the company needs a per square foot cost for facilities that includes power, floor space, and air conditioning.

Spreadsheets are ideal elements to model the values and apply them at the implement per unit entity. This method is most essential, as these are the steps that are going to drive your costs and form the basis of your ROI case. The company needs to be sure Finance is on your side and in agreement with your numbers before you make your further step.

Functional requirements will differ from one system to another depending to the type of cloud service model:

•     What open source options are available?

•     Whether operating systems license costs will be included in the solution or provided by the company, and

•    For IaaS, requirements will relate to the issuing of processing, memory, storage and operating systems. Agencies will need to consider

•    For PaaS, re
quirements should specify both the development and working environment.

•    For SaaS, conditions will be resembling the one of a non-cloud one

Functional requirements should consider the power to backup and restore data or system images, whether it is the provider’s responsibility, and where backups will be stored. They should also consider any bulk data transfer, either as a part of normal operation or in the context of an exit strategy. The firm should consider the options available to transfer data, including network or physical transfers, such as tape or disc packs.

Lastly, agencies should consider any requirements to interoperate or integrate with in-house or back office systems, for example, identity management, and authentication systems.

Deployment of the cloud computing into the ROI

Establishment of a business environment, data on the business environment in which the business should be implemented should be collected and be analyzed. From the data, one should understand whether the business is worthy it to be implemented.  The data collected will give an overview of what the demand is in the market.  

After analyzing the total cost and comparing with the out of the system after deployment, the next step of the system implementation is the deployment state, this part has its technique way of implementing it. Some of the element that ensure that the system implementation becomes a success includes the following.

The implementation starts by first identifying the available system the organization in question is making into use. Under this subcategory of system deployment the IT team should analysis the present system that the organization uses and determine whether the implementation of the new technology will be compatible with it (Rimal, Jukan, Katsaros, & Goeleven, 2011). If the system turns out to be compatible, it the deployment will start step by step while doing some testing in order to ensure that the system does not cause any kind of confusion to the existing system.

Step by step deployment technique gives the IT experts clues of tracking any kind of mistakes that may have been committed during the deployment process. The clues will help the IT individuals identify where a problem arises and allows them to engineer a technique of ensuring the problem is fully settled. The deployments process should ensure that every step is recorded. Recording of each and every stage of deployments will make the IT specialized get clues on what was done at what point when working on some system in the future. The records also keeps track for the aspect maintainer in the future endeavors.

The deployment should also take into consideration some aspect of risk assessment. The system should be put into the some serious analysis and any risk be identified before it is implemented. Any incident that may show some element of risk should be reported and for any case a solution to the risk be provided.

System Testing

 System testing is one of the very important technique that should be given a special consideration in the IT world. If a system is not put to a number of several and logical testing. Absence of system testing may cost the organization resource. Some system come into the organization and corrupt the organization’s system. Take an example of a system that corrupts the financial software of the organization, the effects in the billing and charging will lead the organization in making huge losses that will even make the organization regret implementing it (Chang, Wills, Walters, & Currie, 2012). No matter how effective some kind of system may look, testing should be step by step and it will need time for it to be fully implement into the existing system and its workability will tell whether the system will proceeded to the next level or the company will quit using it.  The testing should ensure that the person taking the task of system testing is an experienced person who can easily identify an issue if it appears in the process of implementation. The above will save time that will be wasted when using people who use trial and error technique who will take time in trying doing something and quit with time.

System Maintenance

Like any other machine, system maintainer should be give an upper hand. The system should be maintained regularly by a specialized. If a system is not regularly mentioned, there exist a like hood that the system will experience several breakdowns and thus making it unworthy to be implement and be used within the organization in question.  Maintainer should not be include when only there exist a problem, the system should be serviced each and every time that was planned that it will be maintained at that time and by who. The maintainer should an expert one and should be aware of any complication and the specialized should be able to ensure that he/she provides any solution to any kind of complication in the system.

In conclusion, system establishment starts will a basic approach of ensuring that the system being implement takes into consideration all aspects of company and follows the company’s needs. It should analysis the company’s financial status and establish whether the system will bring profit to the organization in question. All aspects put into consideration, the system will then be said to be relevant and thus the follows is the system implementation, testing and maintain techniques.

 

 

 

References

Rimal, B. P., Jukan, A., Katsaros, D., & Goeleven, Y. (2011). Architectural requirements for        cloud computing systems: an enterprise cloud approach. Journal of Grid Computing,             9(1), 3-26.

Chang, V., Wills, G., Walters, R. J., & Currie, W. (2012). Towards a Structured Cloud ROI: The University of Southampton Cost. Sustainable ICTs and management systems for green    computing, 179-200.

Buyya, R., Broberg, J., & Goscinski, A. M. (Eds.). (2010). Cloud computing: principles and          paradigms (Vol. 87). John Wiley & Sons.