Post on 21-Aug-2015
Jonathan_W
Does the Cloud ROI Stack up?
Justin Pirie@justinpiriehttp://justinpirie.comjp@justinpirie.com
Cloud Circle- LondonApril 20th 2010
Analyst Blogger
Community Manager
Social Media Influence
Where I work
Benefits of Google Apps
For Microsoft Exchange
Over 500,000 users can’t be wrong!
Why we’re really here...
William Vambenepe
SPI stack
IaaS ROI is about Utility Premium
A Sl
ight
Adj
ustm
ent
http://www.flickr.com/photos/rustyboxcars/ CC BY-SA 2.0
William Vambenepe
Look back
Guess who?
Yes, them
Need new goggles
@kobak
Empowers
Jan Michael Ihl
Traditional IT Dept.
@appirio
Business feeling about IT
Outsourced IT Dept.
@appirio
Business feeling about IT
IT using Managed services
@appirio
IT using Cloud
@appirio
Fall in love again
The Telegraph newspaper
@lmacvittie
What next... Growing pains
(user) Experience
Security
And now the science bit...
Simplistic
Again, Simplistic
Simple ROI models are broken
° ρЯίтΛм ° [away]
Compare Apples to Orangeshelgasms!
Risk Adjust
Need a methodology
Apply it to email
5 Customers, focused on a 5000 seat site
Costs (non risk-adjusted, US$)
Initial Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Mimecast setup costs $3,000 $3,000 $3,000
Costs of internal labor (20 person days)
$7,680 $7,680 $7,680
Costs for ingestion of existing email archives (2 TB)
$42,060 $42,060 $42,060
Total SaaS fees per year ($60 per user per year)
$300,000 $300,000 $300,000 $300,000 $300,000 $1,500,000 $1,137,236
Mimecast support charges $12,000 $12,000 $12,000 $12,000 $12,000 $60,000 $45,489
TOTAL costs $52,740 $312,000 $312,000 $312,000 $312,000 $312,000 $1,612,740 $1,235,465
Work out Cloud costs
Benefits (non risk-adjusted, US$) Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Email filtering cost savings $90,000 $90,000 $90,000 $90,000 $90,000 $450,000 $341,171
Legacy systems cost savings
$9,121 $5,787 $5,787 $5,787 $5,787 $32,270 $24,969
Total Cost Savings $99,121 $95,787 $95,787 $95,787 $95,787 $482,270 $366,140
Benefits (non risk-adjusted, US$) Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Replication cost avoidance $129,636 $65,996 $65,996 $65,996 $131,236 $458,860 $348,540
Archiving infrastructure cost avoidance
$367,160 $95,591 $95,591 $95,591 $398,631 $1,052,565 $797,411
Total Cost Avoidance $496,796 $161,587 $161,587 $161,587 $529,867 $1,511,425 $1,145,951
Cloud Benefits- Savings and Avoidance
Benefits (non risk-adjusted, US$) Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
IT help desk productivity
gains $7,744 $7,744 $7,744 $7,744 $7,744 $38,720 $29,356
eDiscovery productivity gains
$30,528 $30,528 $30,528 $30,528 $30,528 $152,640 $115,725
End user productivity gains $138,233 $138,233 $138,233 $138,233 $138,233 $691,167 $524,013
Total productivity gains $176 505 $176 505 $176 505 $176 505 $176 505 $882 527 $669 094
Benefits (non risk-adjusted, US$) Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Business continuity — move of a branch office
$472,727 $472,727 $429,752
Business continuity — email availability during unplanned downtime
$105,456 $105,456 $105,456 $105,456 $105,456 $527,280 $399,761
Total Business Continuity $578,183 $105,456 $105,456 $105,456 $105,456 $1,000,007 $829,513
Cloud Benefits- Productivity + Specific
Benefits (non risk adjusted, US$)
Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Cost avoidance $496,796 $161,587 $161,587 $161,587 $529,867 $1,511,425 $1,145,951
Business continuity $578,183 $105,456 $105,456 $105,456 $105,456 $1,000,007 $829,513
Cost savings $99,121 $95,787 $95,787 $95,787 $95,787 $482,270 $366,140
Productivity gains $176,505 $176,505 $176,505 $176,505 $176,505 $882,527 $669,094
TOTAL benefits $1,350,605
$539,336 $539,336 $539,336 $907,616 $3,876,229 $3,010,698
Cloud Costs + Benefits
Benefits (non risk adjusted, US$)
Year 1
Number of users 100
SaaS Costs ($60 x 5 years) $30,000
Cost of On-premise $76,640
Flexibility Benefit $56,649
Flexibility scenarios e.g. New Office
Risk Adjust
Totals- Non- risk adjusted
Totals- risk adjusted
Year 1 Year 2 Year 3 Year 4 Year 50
200
400
600
800
1000
1200
1400
MimecastOn-Premise $'
000
Cloud Annual Investment
Year 1 Year 2 Year 3 Year 4 Year 50
500
1000
1500
2000
2500
3000
3500
MimecastOn-Premise $'
000
Cloud Cumulative Investment
“100% ROI in less than 100 days.”
Chris Petrie, IT Director
“A "SaaS first" policy is being enacted in the majority of small and midsize businesses”
Feb 2010
Trust but verify
“You have to dive in to learn the lessons”
Mark Brewer, CIO
Elephant in the room....
David Blackwell (Dilettante)
Network Effects and Ecosystems
Jonathan_W
Justin Pirie@justinpiriehttp://justinpirie.comjp@justinpirie.com
Any Questions?