http://crc.aut.ac.

ir
 Business Views in Cloud Computing

CSP
Business
CSC View
Business
View

2
 CSC Business View

CAPEX to OPEX
Economies of Scale
Business Value Measurements (TCO, NPV & ROI & IRR)
Business and Technical Performance Metric

3
Capex to Opex
Economies of Scale

5
 CSC Business View
TCO (Total Cost of Ownership)
is simply the sum total of all associated costs relating
to the purchase, ownership, usage, and maintenance of a
particular product. Including hardware / software /
maintenance (support, bug fixes, upgrade) / power / etc.
NPV (Net Present Value)
... time value of money
ROI (Return of Investment)
justify (or deny) capital investments for IT.
IRR (Internal Rate of Return)
is the interest rate at which the net present value of all
the cash flows (both positive and negative) from a project
or investment equal zero.

6
 Basic Example of TCO Analysis
(Annual Total Cost of Ownership for a Single Disk Storage Unit)

Source: Cisco, The Economics of Cloud Computing, 2012

7
 TCO Calculators

awstcocalculator.com softwareadvice.com/tco
 NPV

NPV= ( )
=1 (1+)

Using a rate of return of 10 percent, what is the NPV of a $1 million

investment with cash inflows of $500,000 each year for three years?
NPV = $1,000,000 + [$500,000/(1.1)] + [$500,000/(1.1 2) ] + [$500,000/(1.1 3) ]
NPV = $1,000,000 + $454,545.45 + $413,223.14 + $375,657.40
NPV = $243,426.00

Example Tool: Excel NPV Function

 NPV Calculator

10

Investopedia.com/calculator Calculatorstuff.com/financial/npv-calculator
 ROI

ROI =


100%

For the Previous Example

ROI = ($1,500,000 $1,000,000) / $1,000,000
ROI = 50%

How to fine Tune ROI?

 ROI Calculator

http://calculator.net/roi-calculator.html
12
 IRR
( )
=1 (1+IRR)
=0

For the Previous Example

NPV = $1,000,000 + [$500,000/(1+IRR)] + [$500,000/(1+IRR)2 ] + [$500,000/(1+IRR)3]
IRR = 23.375%

Example Tool: Excel IRR Function

13
 IRR Calculator

Calkoo.com Calculatorstuff.com/financial/irr-calculator
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 Case Study
Company XY, a fictional biotechnology company with a proven track record of helping its customers reduce
their time to market for new drugs. XY began life as a research firm processing large clinical data sets for
companies. With the addition of new partners, XY began adding research and development as well as
marketing and branding services.

XY is now a full-service clinical research organization with an employee base of 100 individuals (including IT,
sales, research, and design). XY has a small data center today where it hosts its customer databases,
research libraries, and sales and finance applications.

XY has signed two major contracts in the past three years, contributing to 100 percent revenue growth year
over year. The company currently hosts customer data in excess of 500 TB, supported by a relatively small
IT staff of 20 engineers and developers. Traffic on XYs online portal (where the company shares data with
development teams at partner firms) has grown 60 percent in the last two quarters.
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 Case Study
To account for the servers and applications, I have added server hardware and
maintenance and customer relationship management (CRM) software licenses. I
have also included basic switching, routing, and load-balancing hardware for
network access. Finally, I have increased the engineering FTE chargessix
individuals at $150,000 per yearto cover administration of the storage, network,
server, and software plat- forms.

The total annual run rate is $1.97 million for the depreciation of all hardware and
software (using straight-line depreciation over three years) and for facilities and
labor expenses. XYs total cost of ownership over three years is $5.91 million.
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 TCO Analysis: Traditional vs SaaS
Annual Total Cost of Ownership for Company Xs IT Annual Total Cost of Ownership for Company Xs IT Supply Chain
Supply Chain (SaaS)

Source: Cisco, The Economics of Cloud Computing, 2012 17

 ROI Analysis: Traditional vs SaaS
Software as a Service Cost Comparison

$212,500 Investment for New license

ROI = (Gains from investment Costs of investment) / (Costs of investment)

ROI = ($487,500.02 $212,500.00) / $212,500.00
ROI = 129.41%

NPV = $212,500 + ($487,500.02/1.1) + [$487,500.02/(1.1 2 )] + [$487,500.02/ (1.1 3 )]

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NPV = $212,500 + $443,181.84 + $402,892.58 + $366,265.98
NPV = $999,840.40
 SaaS CRM upgrade Summarizes

Software as a Service Analysis Summary

Tip: $212,500 / $487,500.02 = 0.43

0.43 * 12 months = 5.23 months

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Speed of Cost Reduction, Cost of Change

20
Building Return on Investment from Cloud Computing, The Open Group, 2010
 Exercise 1.3

Analyze 3Years TCO, NPV & ROI & IRR for exercise 1.x

21

...

22
 On-premise Infrastructure Platform Software Business Process
Environment (as a Service) (as a Service) (as a Service) (as a Service)
Product / Product / Product / Product / Product /
Service / Value Service / Value Service / Value Service / Value Service / Value
Business / Business / Business / Business / Business /
Process Process Process Process Process M
Application Application Application Application Application A
N
A
Data Data Data Data Data
G
Y
E
O Runtime / API Runtime / API Runtime / API Runtime / API Runtime / API D
U
Middleware Middleware Middleware Middleware Middleware B
M
Y
A
OS OS OS OS OS
N
P
A
Virtualization Virtualization Virtualization Virtualization Virtualization R
G
O
E
Hypervisor Hypervisor Hypervisor Hypervisor Hypervisor V
I
Server Server Server Server Server D
E
R
Storage Storage Storage Storage Storage 23

Networking Networking Networking Networking Networking




25



27


28


Cloud performance is more that just the SLA measurement

between the consumer and provider.

Performance metrics focus on how IT operations and business

are aligned and performing.

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Source: Cloud Performance Metrics, The Open Group, 2013
 ()1

30
 ()1

31
 ()1

32
33
 Registration Time

UoM: Time, Ratio, Percent

34
 Provisioning Time


=

UoM: Time, Ratio, Percent

35
 Response Time

=

UoM: Time, Ratio, Percent

36
 System Throughput

UoM: Transactions/time, Ratio, Percent

37
 System Availability

= +

UoM: Ratio, Percent

38
39
 Key Business Operations Support

Key Business Operations Support = ( )

LoS: Level of Support to Each KBO

KBO: Key Business Operations

UoM: Persona-day, Ratio, Percent

40
 End-to-End Service Integration Efficiency

2 =

UoM: Ratio, Percent

41
 Catalog Density

=

100

UoM: Ratio, Percent

42
43
 Churn Rate

Policy Compliance Ratio =


*100%

UoM: Ratio per unit time, Percent per unit time, revenue loss per service

44
 Legal Policy Compliance

Policy Compliance Ratio =

*100%

UoM: Ratio, Percent, Currency Value

45
 Legal Sovereignty Scalability


Legal Policy Ratio for a Legal Policy=

*100%

Legal Sovereignty Border Ratio for a Legal Policy= *100%

UoM: Ratio, Percent

46
 ()2

47

Source: CAT, The Asia Cloud Computing Association, 2012


4 3 2 1
*
*
*
*
*
*
*
*

1
-2
-3 48

-4

D C B A
L1 L3 L1 L1
L4 L3 L1 L1
L3 L4 L1 L1
L1 L3 L1 L3
L1 L3 L1 L1
L1 L3 L1 L4
L4 L4 L3 L1
L1 L3 L1 L1
L1 L3 L1 L1

49

4 3 2 1

* PCI
SSAE16 * SAS70
* ISO 9000
* ISO 27001/2
* ISO/IEC 20000
* EN16001 / ISO50xx
* Uptime Ins.
* HIPPA
* Vendor Cert
* Legal 50
* Patch

4 3 2 1



SW







IP Spoofing
51



4 3 2 1

CMM L4 CMM L3 CMM L2

24*7

ITIL L4/5 ITIL L3 ITIL L2 SLA

52


4 3 2 1

99.9995 99.999 99.99 99.95 %

100us 1ms 10ms 100ms VM VM

+ +

1 > + +
()
API HA +

SLA vCPU L2
( )... ( ) 53

()Tiered

4 3 2 1

/ / /

100% 99.9999% 99.996% 99.99%

<=50 ms

:QoS
/
0.001% 0.01% <=0.1% :QoS

54

<=180 ms <=230 ms :QoS


Tier 1 Tier 2 Tier 3 Tier 4

2 3 4 4 Tier 4

1 2 3 4 Tier 3

- 1 2 3 Tier 2

- - 1 2 Tier 1

- - 1 2
55

4 3 2 1

Service Desk

<=20 s 24/7

%100

2 4 MTTR

15 30
56


4 3 2 1

OVF

( )
DMTF

57

DMTF
 Exercise 1.4
A
L1
L1
Evaluate Services on Exercise 1.x L1
based on the CAT L3
L1
L4
L1
L1
L1

58