Business Case for Cloud Computing

Lot have been written on cloud computing. But is it really a viable option? if yes. Then how do we assess it and measure the business value? What are the main challenges in the technology? In short lets break the problem in brief, like a Technology Consultant.

The Definition: Cloud computing refers to the delivery of software, infrastructure, or development platforms as a service [SaaS, IaaS, PaaS], enabled by a multi-tenant architecture which can provide service on-demand, elastically, as determined by customers through a usage-based metering system.

The Assessment: The assessment will be based on how well we can formulate the interview questions based on the cloud characteristics.
Some of the typical questions which can be used for assessment are,

1. Is your data centre footprint approaching maximum capacity?
2. Have hurdle rates increased significantly for new capital investments?
3. Does your application portfolio consist primarily of “commoditized” applications?
4. Do you have frequent or sudden “spikes” in demand for applications?
5. Are new skills and capabilities required to support future hosting and storage requirements?
6. Do you run applications that require minimum integration with the remaining portfolio?
7. Do you have data processed or stored by your data centre which is free from stringent (i.e., above average) security, privacy, or regulatory requirements?

If the answer to any of these questions is Yes. Then there is definitive need for a business case which can bring out the cost-benefits analysis or ROI or IRR for the applications. And Must remember, Cost is not the only benefit from cloud computation.

Business Case consideration: Some of the cost, which should be taken care while creating a business case.

1. Third party integrations. How many integration points are needed. Who all vendors are available for integration.[Cap-ex will include all integration cost]
2. If looking for a migration from existing application [on-premise] to cloud, then migration cost need to be reflected.
3. Applications with high rates of data transfer may incur additional cost, as well as require greater network capacity. [this will include the vendor cost plus the infrastructure need to enable the cloud]
4. Identify services which need 24/7 operations and support, as they may more expensive over the long term than internal options.

Challenges:

1. Vendor identification. who can provide a high degree of customization or integration, if needed. After that there is a challenge in integrating the services with internal architecture..
2. Compliance with security, privacy, and regulatory requirements
3. Lack of clear standards for integration and licensing with third-party software
4. Potential for “lock-in” with cloud provider’s technology
5. Sensitivity to latency considerations.
6. Subject to provider’s timeline and support for service failures. Vendor’s SLA’s may not meet your requirements?

Benefits:

1. Provides capacity beyond internal data centre limits and preserves capital spend [Think about spikes in traffic]
2. Enables ability to scale dynamically with demand [A phone call]
3. Reduces software development and maintenance cost burden [There is a new ache called IT ache: Cloud computing can be the balm]

Apart from the business case, other areas where the consultants can help the industry are

1. Rating and assessing the applications for cloud computation.
2. Vendor Selection
3. Risk analysis and mitigation
4. Migration to cloud

Note: Author is a Technology Consultant for emerging technologies and Business – IT alignment.

Related posts:

1. Decisions selects Cloud Computing Centre to host SaaS business – TMCnet Feb 19, 2010 (TELECOMWORLDWIRE via COMTEX) -- Database software provider...
2. Jitterbit Delivers Integration Software Solutions for NetSuite Cloud Computing Platform (Marketwire via Yahoo! Finance) OAKLAND, CA--(Marketwire - 02/23/10) - Jitterbit, a leading provider of...
3. News: Cloud or No Cloud- UK Govt. evaluates its options Whitehall IT chiefs have been warned by the intelligence agency...
4. EdgeWord: A Note from the Publisher: The Case Against Cloud… The Case Against Cloud Computing The more information we save...
5. What is Cloud Computing? Traditional business applications and platforms are too complicated and expensive....