A guide to the ROI Analysis of cloud computing

IDC sees cloud computing as one of the most likely transformative developments in the IT field over the past 20 years. "Many companies have chosen virtualization to generate direct, easily measurable http://www.aliyun.com/zixun/aggregation/5368.html" > ROI by deploying basic applications such as mail and collaboration. For example, it is more complex and often unclear to assess the return on investment of private clouds and PAAs. This could set a hurdle for companies to invest more in cloud computing. In addition, the recent economic slump has forced companies to cut back on technology and further limit investment in cloud computing. Despite these hurdles, cloud computing will soon be the one thing companies must do.

Before investing return analysis: Cloud assessment

Before actually calculating the ROI, the company must decide whether it is appropriate to migrate the application to the cloud based on the cost of the existing application. There are many ways to help make this decision. We have developed a cloud assessment tool that can guide users through overall assessment and ROI analysis.

Figure 1. Demonstrate the cloud assessment framework for persistent companies

Investment return analysis can be done in several ways. To assess ROI, the following three things must be done:

1 Identify applications already deployed in the enterprise

2 analysis of each application load and business heuristics

3 development of the proposed cloud strategy (advance acquisition vs. Cloud)

It is necessary to spend more time in the prophase to understand how to achieve the total ROI. The return on investment to migrate to the cloud can be calculated only after the cloud assessment has been completed.

The return on cloud investment is composed of 3 major advantages:

· Cost savings

· Increase productivity

· Income transformation

Cost savings

After classifying the application of the enterprise and setting the cost baseline, the company can evaluate the potential cost savings. The first tier of workloads can yield a 50% return on investment, and a third tier of workloads can earn a 70% return on investment. For example, the following is the ROI of an ERP migration to a public or private cloud.

· 82 fewer servers used from 11 units

· The number of cabinets used was reduced from 11 to 1

· 50% Reduction in capital expenditure

· Reduced operating costs by 80%

Human

It budgets that directly save human costs after migrating to the cloud. Global businesses typically spend 67% of their IT operations on human resources, including 40% of IT budgets for application development and maintenance. In the cloud, the people who manage the infrastructure will be greatly reduced, and when applications in the cloud are running on top of the automation platform, the cost of managing the infrastructure will be completely eliminated. After migrating to the cloud, the ratio of people to servers in the enterprise can be increased from 1:5 to 1:10 or even 1:15.

Software

Software spending accounts for 16% of global corporate IT budgets, including 12% IT budgets for application licensing and maintenance, and 4% IT budgets for infrastructure software. In the cloud, users can get software and independent software license anytime, anywhere, and charge based on mirroring. Because the company only needs to pay the license fees already in use, this greatly reduces the total software licensing costs and maintenance costs, the previous fixed cost conversion in order to optimize the target variable costs.

Equipment

Typically, global companies spend 8% of their IT budgets on equipment acquisition, including 4% IT budgets for Application Server acquisitions, 3% IT budgets for device acquisitions, and 1% IT budgets for storage acquisitions. This part of the IT budget will increase as the business becomes more complex and requires a stronger infrastructure. Hosting hosts in the cloud can be rewarded in the following three areas compared to the existing advance acquisition model:

· Capital expenditure vs. Operating expenses: The biggest difficulty in cost saving in advance purchase equipment is that the cost of organizing equipment procurement is capital expenditure. The return potential of the cloud is clear: in the cloud, all costs are operating expenses.

· Asset utilization: Transition from an early-purchase model to a cloud-based model that allows enterprises to use IT infrastructure online with greater efficiency. When the organization is close to the total capacity of the existing hardware, the decision to migrate to the cloud could mean millions of of dollars in savings.

· Power and Refrigeration: to allow organizations to use existing infrastructure more efficiently and reduce demand for new capacity, cloud models can significantly reduce the cost associated with power and refrigeration in enterprise data centers.

(Responsible editor: Lu Guang)