How to determine the bottom line of cloud computing ROI

Most storage experts know that it is difficult to accurately determine the ROI of cloud computing. In a pay-as-you-go model for many cloud storage, figuring out which metrics are most needed is often a challenge when trying to determine the actual cost of spending on cloud computing, including determining the benefits of saving local costs. Although there is no simple formula to calculate the return on investment (ROI) over the next few months or years, storage administrators can accurately calculate their ROI by following some steps.

"There is no such thing as a one or two-parameter input," said Taneja Group's founder and consulting analyst Arun Taneja, "and I certainly don't think it's that simple." ”

In fact, Taneja recommends a series of steps to determine an accurate ROI.

"Take a full look at the infrastructure you need if you want to achieve your goals," he explains. This can start by asking yourself some key questions.

• Where do you store your data now?

• Is this a new project? What backup system do you need to store the data?

• What kind of storage do you need?

• What kind of de-duplication technology do you need?

You need to list the construction and operating costs of your own system in order to compare with the corresponding cloud computing costs. "This is the biggest difference when considering cloud computing centers and data centers separately." In the Cloud Computing Center, you only have operating expenses, no need to consider construction costs. In the data center, you need to think about it. Taneja explained.

For example, assuming you're preparing to put backup data in the cloud, you need to focus on some cost items related to backups, including:

• The overall architecture of the backup

• System upgrades and the final cost of purchasing new equipment

• Any possible future construction expenses, including additional costs to upgrade

• Any future operating expenses, including additional costs to migrate to the new system

These cost factors no longer exist when switching to cloud computing. For example, a large cost of upgrading to a new backup server, and no need to consider the cost of a disk system.

"It's a good start," Tanaja said. The next step is to contact the cloud service provider to find out what you need to store the data, and to figure out the monthly cost per GB of data. Taneja recommends selecting multiple services for comparison, which is one of the steps he mentioned that can be relatively simple compared to calculating the cost of construction and operating costs.

Ted Rtter, a leading research analyst at Nemertes Consulting, a company based in Illinois State Mokena, says it is often easier to calculate construction costs. But before coming to a conclusion, it will be found that it is challenging to figure out the actual operating expenses.

"The tricky part is operating expenses--for example, how much labor work is saved if you don't need to manage your storage devices, and if the device doesn't need to be added, it doesn't generate heat, and you don't need a cooling charge." "These cost items are difficult to estimate, which is not a simple formula that can be answered," he explains. ”

It is really difficult to determine operating costs, but it has been a good start by calculating the factors mentioned above.

"In the case of benchmarks, the calculation of operating expenses can be relatively easy," Taneja said. He added that although the first attempt might be difficult, it would be much easier next time.

No matter how easy it may seem to be on the surface, Ritter also realizes that in computing the return on investment in cloud computing, there are usually other hurdles for many companies to overcome.

"The cloud storage provider does clearly identify the costs." But the real challenge is to compare your internal construction costs when you determine the ROI. The problem our consultants find is that most organizations do not know which storage they are currently using to consume their costs, "Ritter explained. "If you don't know where your costs are, you can't tell how much is saved," he said. ”

As with Tanaja's advice, Ritter that the key to a successful return on investment is to honestly analyze the options that will be taken and to figure out what costs the company will produce.

"You have to say, well, I know that next year, I need 30TB of storage to support this application, or backup, which can be determined by the circumstances, but I need this money." Then I can figure out how much money I have to spend to expand my infrastructure. "I took this number to find a cloud storage provider and calculated the cost of cloud storage on the spot." ”

Planning for expansion and estimating its costs is key, he said.

Whether or not cloud providers provide ROI calculations, Ritter and Taneja recommend checking the results you get with different measurements. Look at the data you've calculated, and it's always harmless to be aware that your suppliers are trying to conceal your expenses.

"In times of economic hardship, prices are the bottom line, and it's crucial." Ritter said bluntly. "Unlike internal storage, there are problems with cloud storage. When you are ready to migrate to cloud storage, you may encounter risks that are not generated by internal storage. It's not as simple as taking two apples. A key factor in decision making is the ROI model. ”

Practical example: VRX studio using Microsoft Azure storage

At the end of last year, when the VRX studio launched its web-based Mediavalet global Digital Asset Management Service, VRX chief executive David Maclaren decided to host it on Microsoft's Azure cloud. The VRX of Vancouver's B.C is already using Azure's cloud computing and processing power, and the company has purchased Azure's storage services when the Mediavalet business is online.

Maclaren estimates that buying and deploying a storage system may require 300,000 to 500,000 dollars for hardware and software at an early stage. He said there are also infrastructure investment needs in Europe and Asia to support its global operations, which will double its initial investment. Instead, he says, using Azure cloud storage, VRX can use a limited amount of money to hire developers to develop mediavalet core functions, so that customers can use metadata to perform tasks such as sorting, searching for digital files, and assigning and managing user rights.

"We estimate that the cost of bringing mediavalet to market by using Azure services is at least 50% less." "Maclaren said. "We don't want to put too much upfront on infrastructure," he said. Azure keeps us from taking into account the need to build infrastructure. We tell azure what we need, and then we can pay on demand. ”

Microsoft Charges for storage, usage, and computing power. Maclaren declined to disclose the total amount of data it had stored in azure, but he said it was "TB-grade." "His monthly bills vary depending on the amount of usage, but he says the cost is always lower than hiring an IT staff to manage the system."

"Our costs can be increased and reduced flexibly as business changes," he said.

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