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cloud economics - Toronto FSI Symposium - October 2016
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Transcript of cloud economics - Toronto FSI Symposium - October 2016
© 2016 Cloud Technology Partners, Inc. / Confidential 1
Cloud Economics
October 11, 2016
Stuart Robertson
© 2016 Cloud Technology Partners, Inc. / Confidential 2
• AWS Certified Solutions Architect
• Former Business Analyst with a history in
Private Equity
linkedin.com/in/stuartdrobertson
Introduction
Stuart Robertson
Manager, Global Alliances at CTP
© 2016 Cloud Technology Partners, Inc. / Confidential 3
Agenda
1. Start with the Why
2. How to build your economics analysis
3. What you should expect
© 2016 Cloud Technology Partners, Inc. / Confidential 4
Start with the ‘Why’
Biz
Case
Cloud Economics are Essential to the ‘Why’
1. CEOs / CFOs need to see a business
case!
2. Cloud economics are a key component
of that business case.
3. The business case will differ depending
on your why.
a. Eg - Data center shutdown vs agility
© 2016 Cloud Technology Partners, Inc. / Confidential 5
What Happens Without a Business Case?
© 2016 Cloud Technology Partners, Inc. / Confidential 6
What Happens Without a Business Case?
© 2016 Cloud Technology Partners, Inc. / Confidential 7
What Happens Without a Business Case?
© 2016 Cloud Technology Partners, Inc. / Confidential 8
Show of Hands….
© 2016 Cloud Technology Partners, Inc. / Confidential 9
Bad News...
How accurate is your CMDB?
This ‘quick and dirty’ estimate is only a fraction of the real cost.
© 2016 Cloud Technology Partners, Inc. / Confidential 10
Next Comes the ‘How’
There are a lot of things you need to consider
1. An economic analysis is not a ‘one size fits all’
type of model.
2. Different companies have different reasons for
moving to the cloud, and an economic analysis
should justify those reasons.
The complexity of a cloud economics calculation
depends on the needs of the business and the
decision context of the migration program.
© 2016 Cloud Technology Partners, Inc. / Confidential 11
Cost to ‘Run the Engine’
• Compute
• Network
• Storage
• Support
• Labor (training, new hires, etc)
Cloud Economic Analysis - Various Sizes
Pure TCO
TCO Plus
ROI
© 2016 Cloud Technology Partners, Inc. / Confidential 12
Holistic Business Impact
• Migration Costs
• Refactor Costs
• Operational Transformation Costs
• 3rd Party Tool Costs
• Software Costs (Aurora vs MSSQL)
• Value of increased redundancy
• Decreased provisioning time
Cloud Economic Analysis - Various Sizes
Pure TCO
TCO Plus
ROI
© 2016 Cloud Technology Partners, Inc. / Confidential 13
Qualifying Qualitative Benefits
• Increase market share through
global distribution
• Releasing applications faster
• Recruitment value
• Increased BC/DR value to firm
• Increased security value to firm
Cloud Economic Analysis - Various Sizes
Pure TCO
TCO Plus
ROI
© 2016 Cloud Technology Partners, Inc. / Confidential 14
Pure TCO
TCO Plus
ROIMost firms land somewhere
in the middle.
• A Pure TCO is not
defendable and is too
simplistic
• A full ROI is overkill
Cloud Economic Analysis - Various Sizes
© 2016 Cloud Technology Partners, Inc. / Confidential 15
• Security / Compliance
• Scalability and Availability
• Global Distribution
Scoping the Economic Analysis
TCO /
ROI
Scope
• Application Inventory
• Data and Users
• Dependencies / Integration
• Cost Reduction / Allocation
• Critical Dates
• Agility and Scalability
• Organization
• Resources
• Schedule
• 3rd Parties
IT Estate
Strategic
Objectives
Architecture
Constraints
Planning
Constraints
© 2016 Cloud Technology Partners, Inc. / Confidential 16
Cloud Economics Development Process
Current State
Assessment
Future State
Architecture
Economic
Model
Business Case
/ ROI
Application
Inventory
Current State
Requirements
(encryption, BC/DR,
SLAs)
Application
Footprint
Operational
Transformation
Application BOM
and Softwares used
in the Cloud
Common Services
Qualitative /
Quantitative
Benefits
Executive
Presentation
© 2016 Cloud Technology Partners, Inc. / Confidential 17
• Compute, network, storage
• Server utilization
• Software versions
• Operational tools
Economic Analysis Starts with Understanding Your Deployment Architecture
• Rightsizing
• Uptime scheduling
• Environment reduction
• Defense in depth security
Current State Assessment Future State Architecture
40% Scheduled Uptime
30% Scheduled Uptime Autoscaling
StageProduction
TestTest
Test
Dev
TestTest
Dev
ProductionStage
DevDev
DevDev
Dev
DevDev
DevDev
DevDevDev
Dev
© 2016 Cloud Technology Partners, Inc. / Confidential 18
• Infrastructure costs on AWS
• Data transfer costs
• Software costs
• Operational tools
The End Goal of an Economic Analysis is the Business Case
• Agility savings
• Time to provision
• Increased security on AWS
• Recruitment value
Economic Model Business Case
© 2016 Cloud Technology Partners, Inc. / Confidential 19
Financial Management in the Cloud Business Office (CBO)
Client Engagement
Risk & Controls
Monitoring
Financial
Management
Third Party
Engagement
Product
Management
Service Catalog
Management
Demand
Management and
Decisions Support
Reporting End-User Feedback
Solicitation
Communications HR / Training
The CBO leads ongoing management of your public cloud environments.
© 2016 Cloud Technology Partners, Inc. / Confidential 20
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%+ utilization.
3. Securing your applications requires investing in cloud-aligned
security frameworks for defense in depth.
4. Developing full stack automation for agility is not cheap - but is
worth the cost.
5. Don’t underestimate the cost of organizational transformation.
© 2016 Cloud Technology Partners, Inc. / Confidential 21
What Our Experience Has Taught Us
40% Cost
Savings
Automation Change Management
Security, Governance,
and Compliance Migration
Software
© 2016 Cloud Technology Partners, Inc. / Confidential 22
Cloud EconomicsAre you getting the bigger picture?
cloudtp.com/doppler
© 2016 Cloud Technology Partners, Inc. 23
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