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Cloud Computing

This video explores the fundamentals of cloud computing, comparing it with traditional internal IT and managed services. It covers three basic approaches, discussing the costs associated with starting and maintaining infrastructure, adaptability during peak demands, and expertise requirements. Through a financial case study, it illustrates practical cost comparisons over five years between internal IT and cloud solutions, emphasizing the importance of choosing the right approach based on performance, growth, and operational needs.

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Cloud Computing

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  1. Cloud Computing

  2. What is Cloud Computing?

  3. Video • http://www.youtube.com/watch?v=okqLxzWS5R4 • Thoughts?

  4. Video • http://www.youtube.com/watch?v=BYP3uMOobqk • Thoughts?

  5. We can categorize three basic approaches to IT. Internal IT • You own/manage/support dedicated servers Managed Services • Pay somebody else to own/manage/support dedicated servers Cloud • Pay for access to computing and you create/use/terminate servers dynamically

  6. How much does it cost to get started? • Internal: • Managed Services: • Cloud:

  7. How much does it cost to get started? • Internal: Your paying for the infrastructure before you use it • Managed Services: A moderate fee charged to get things up and configured. • Cloud: Perhaps a small “welcome” fee.

  8. How much does it cost to run day to day? • Internal: • Managed Services: • Cloud:

  9. How much does it cost to run day to day? • Internal: Staff + equipment + utilities + facilities + … • Managed Services: This is what you are paying for • Cloud: Depends on the daily usage

  10. How much time is required to add new components? • Internal: • Managed Services: • Cloud:

  11. How much time is required to add new components? • Internal: Must procure, set-up, test, deploy. • Managed Services: Buy in bulk and are ready to deploy. • Cloud: Virtualization means components created/configured in minutes.

  12. How effectively can the infrastructure adapt to peak demands? • Internal: • Managed Services: • Cloud:

  13. How effectively can the infrastructure adapt to peak demands? • Internal: It’s fixed and adding new equipment is both expensive in cost and time. • Managed Services: Can offer temporary assistance which comes at a moderate price • Cloud: Uses virtualization and can automatically expand as needed.

  14. The required in-house expertise to keep the infrastructure tuned appropriately. • Internal: • Managed Services: • Cloud:

  15. The required in-house expertise to keep the infrastructure tuned appropriately. • Internal: Requires staff to know it all and more • Managed Services: Pure contract • Cloud: Depends on the use - generally is less than Internal, more than Managed Services

  16. How likely is it that your services will be up 24/7/365? • Internal: • Managed Services: • Cloud:

  17. How likely is it that your services will be up 24/7/365? • Internal: depends on staff expertise and cash investment into hardware/software • Managed Services: This is the point. • Cloud: It’s generally good but the jury is still out

  18. Other factors need to be considered. • Regulatory concerns • IP concerns • Significant sunk costs • Significant performance requirements • Anticipated growth

  19. Financial Cast Study:Should we develop in-house or move to a cloud? • Most days : 4 servers needed • One day a month: • 9 servers needed to maintain performance • Go with 6 and accept degradation • Internal: • Rack, firewalls, load balancer, switches

  20. Internal start-up costs Servers : $36000 ($6000 each) Rack : $3000 Switches : $3000 ($1000 each) Load balancer : $30000 Firewalls : $3000 ($1500 each) Labor : $15000 (4 employees for 1 month @ $45K/year) Total : $77,400

  21. Cloud start-up costs: Servers : $0 Rack : $0 Switches : $0 Load balancer : $0 Firewalls : $0 Labor : $1250 (1 employee for 10 days @ $45K/year) Total : $1,250

  22. Internal monthly recurring costs: Rack : $500 Mgmt Software : $150 Labor : $7500 (2 employees @ $45K/year) Degradation : $150 Total : $8300

  23. Cloud monthly recurring costs: Load balancer : $73 ($0.10/hr for month) Servers : $3040 ($1/hr/machine for month) 24/7 support : $2000 Mgmt Software : $730 ($1/hr for month) Labor : $3750 (1 employee @ 45000/year) Total : $9593

  24. Choose the option to run for five years. Internal • Initial : $77400 • Monthly : $8300 Cloud • Initial : $1250 • Monthly : $9593 Need any other information? Discount rate is 10%.

  25. Over five years… Internal : ~$447,930 Cloud : ~$437,520 That’s NPV. Without the discount rate, the raw totals are Internal : ~$575,400 Cloud : ~$576,800

  26. Resources - Books

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