Cloud Economics, from TCO to ROI

© 2016 Cloud Technology Partners, Inc. 1

Cloud Economics

From TCO to ROI - Understanding the bigger picture.


1. Ensure realistic expectations for your TCO / ROI analysis

2. Walk through the process of creating a holistic TCO / ROI analysis

3. Reflect on results uncovered through prior engagements

Goals of this Presentation


Introduction

• AWS Certified Solutions Architect

• Cloud architecture, application migration,

cloud strategy, DevOps / CloudOps

[email protected]

@kacyclarke

Kacy Clarke

Vice President,

Principal Architect at CTP

• AWS Certified Solutions Architect

• Former Business Analyst with a history in

Private Equity

[email protected]

@S_D_Robertson

Stuart Robertson

Manager,

Global Alliances at CTP


We Are Re-Living History

Forced faster

production

Ensured safer

transportation

Inspired innovation

by removing

resource constraints

Do these major changes remind anyone of a

current technology shift?

The Industrial Revolution forced the world to change in 4 major ways.

Punished

lethargy and

rewarded agility


How many of you…

Read an article that claimed 50-80% cost savings in the cloud?

Assumed migrating to the cloud would cost the

same as a typical DC migration?

Are concerned about the cost of achieving security and

regulatory compliance in the cloud?

Have been shocked at the spend of development teams

with access to the cloud?

A Few Provocative Questions...


5 Truths for Cloud Economics

1. Replicating what you have in your data center to

the cloud will yield nominal savings.

2. Typical data center average server utilization is under

15%. Optimized cloud deployments achieve 75%+

3. Securing your applications requires investing in cloud-

aligned security frameworks for defense in depth.

5. Understanding the impacts of organizational

transformation is critical.

4. Investing in full stack automation for agility is not

cheap - but it’s worth it.


ROI

TCO or ROI?

Transitional

CostsCost

Calculations

Full program costs vs.

value calculations

The complexity of a cloud economics calculation depends

on the needs of the business and the context of the

migration program.

Pure TCO TCO Plus


• Compute, network, storage

• Server utilization

• Software versions

• Operational tools

TCO Starts with Understanding Your Deployment Architecture

• Rightsizing

• Uptime scheduling

• Environment reduction

• Defense in depth security

Current Footprint Cloud Footprint Optimization

40% Scheduled Uptime

30% Scheduled Uptime Autoscaling

Stage

Production

TestTest

Test

TestTest

TestDev

TestTest

Te

stTe

st De

v

Te

stTe

stDev

ProductionStage


Current State Assessment

Application Inventory Estate Level Assessment

• Sample Application Assessment

• Full Estate Inventory

• Application Migration Approach

Service Levels and Operational Environment Assessment

• Current Infrastructure and Operational Costs

• Current State Architecture Qualities and Requirements

–Availability, Security, Compliance, Scale, Performance, Resiliency

• Current State Operational Models and Processes


Future State Architecture

Application Architecture and Migration Framework

• Sample Application Footprints

• Full Application Estate Extrapolation

• Migration Factory Architecture and Approach

Common Services and Operational Framework

• Common Services Footprints

• Common Services and Operational gap analysis and build out

• Reference Architectures

• Operational Transformation


TCO Model

Application TCO

• Application Bill of Materials

– Cloud services, licenses, etc.

• Ongoing Costs

• Application Migration Cost Model

Common Services TCO

• Common Services Ongoing Costs

• Common Services Platform Build

• Operational Transformation Costs


Qualitative

• Agility

• Developer / Operational Efficiency

• Talent Recruitment Capability

• Adaptability

• Consistency

• Ease of Use

Business Benefits / ROI

Building the Business Case

1. Define the strategic objectives

2. Outline success criteria

3. Identify the qualitative and quantitative benefits

by assessing the current and future state

4. Deliver the Executive Presentation

Benefits

Quantitative

• Infrastructure costs

• Support costs

• Licensing costs

• Uptime

• Mean time to recovery

• FTE’s

• Release frequency


Once the initial TCO/ROI model is created to justify the move to cloud, it

transitions into a living document and provides guidelines for the journey.

On-going alignment to application costs and benefits

• Comply with time and effort constraints for application refactoring

• Rightsize application infrastructure

• Align HA/DR approaches to actual SLA’s

• Utilize reserved and burst instances appropriately

Limit “cloud sprawl”

• Shut down idle dev/test environments

• Archive occasional use environments

• Schedule resource allocation and deallocation for spikey loads

• Implement leases and limits on sandbox environments

From Business Case to Business Guidelines


1. Value of agility

2. Costs to retire selected applications, infrastructure, or data centers

3. Changes required to maintain service levels

4. Software costs

5. Organizational transformation costs

Top 5 TCO/ROI Overlooked Areas


Cloud Economics Are you getting the bigger picture?

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Questions?

Kacy Clarke [email protected]

Stuart Robertson [email protected]

Cloud Economics, from TCO to ROI

Technology

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