Cloud ComputingJonathan Weitz

Bus: 550

June 3, 2013

Agenda

Scope of case file(s)

Case 1: What is Cloud Computing?

Modeling the Cloud

Cloud Economics

Case 2: Economics of Cloud Computing US Gov.

Thoughts, Comments, Questions

Cases

Modeling the Economic Impact of Cloud Computing Australian Information Industry Association Lays a foundation of what cloud computing is , how it is

constructed and the potential economic costs and benefits of a shift in ideology from traditional computing to “Cloud Computing”

Economics of Cloud Computing Addresses the economic implications of US government

mirgration to a Cloud Based network for Information Technology

What is the Cloud?

Cloud computing relies on sharing resources in order to achieve economies of scale and gain greater coherence.

Maximizes the effectiveness as compared to traditional computing.

Example idea: Cloud facility which serves European users during European

business hours with a specific application (eg. email) while the same resources are getting reallocated and serve North American users during local business hours with another application (eg. web server).

Traditional Computing

THE CLOUD

Modelling the Cloud

Cloud computing has four deployment types: Private – Exclusive use by a single organization (may be

outsourced to a 3rd part provider, but sole use is for the single org.)

Public – For use by multiple organizations on a shared basis nad hosted by a 3rd part provider (Amazon & Google Apps)

Community – For use by a group of related organizations Hybrid – A single oganization adopts a private and blupic

model cloud to use the benefits of both applications

Service Models for Cloud Computing

Software as a service – Google Apps

Platform as a service – Microsoft Office 365

Infrastructure as a service – Amazon EC2 & S3

Cloud Benefits

Cloud Computing Economic Benefits

Most identifiable economic benefit of cloud computing is direct cost savings, which occur from changes within the organization and the data centers that house the IT infrastructure. Supply Side – Large scale data centers lower cost due to

superior buying power Demand Side – Allowing multiple users across varying

industries regions & time zones allowing for server utilization Multi-user efficiency – Increasing # of users lowers server

cost per tenant Data center efficiency – Advanced data center designs

reduce power loss and improved cooling

Case Study: Economics of Cloud Computing US Gov.

Public Cloud Adopters: most likely early adopters Department migrates to an IT public cloud Low level of mission, bureau, (Dep of Commerce, Labor, EPA, Dep. of transportation) Assumptions: Transition will occur over 3 years, workload is constant

Hybrid Cloud: middle adopters Department builds a private cloud solution to handle majority of its IT load but uses

a public solutions for low sensitivity apps Dep of Agriculture, Dep of Education, NSF 75 % of the IT server workload will migrate to private and 25 % will be transitioned

to public cloud steadily over 3 years

Private Cloud: Late adopters Department or agency build own private solution or joins in an interagency cloud Broad mission sensitivity Transition will occur over 3 years, workload is constant

Case Study: Economics of Cloud Computing US Gov.

Economic analysis to investigate potential savings of the federal plan by focusing on a proprietary cost model of United States Government IT programs

Metrics used for Analysis: Benefit-to-cost ratio’s (BCR) Net present value (NPV) Discounted payback period (DPP)

Case Study: Economics of Cloud Computing US Gov. Cont.

Benefit-to-cost ratio’s (BCR) Calculated by each cloud scenario’s discounted net benefits less

the cloud’s discounted one-time investment costs. (Absolute metric)

Greater then 1.0 indicates the economic benefit vs. the SQ (status quo environment)

Net present value (NPV) calculated as each cloud scenario’s discounted net benefits divided

by its discounted investment costs. (Relative economic metric)

Discounted payback period (DPP) Reflects the number of years it takes for each scenario’s

accumulated annual benefits to equal its total investment costs.

Economics of Cloud Computing

Net benefits and payback for agencies for hybrid is more similar to private cloud then public.

Based on the 75/25 percent previous assumption.

Sensitivity Analysis

Primary factors driving economic benefit: Reduction in hardware Length of cloud migration schedule Public cloud benefit continues to increase BCR as servers

migrated

Impact of Migration Schedule on Economics

Better to group smaller existing data centers into a larger cloud rather then several smaller clouds

As BCR decreases, DPP increases with transition time.

Take Home: Economics of Cloud Computing US Gov

Cloud computing offers potentially significant savings to federal agencies by reducing their expenditures

Benefits come with risks and practicalities to consider: Will take 2-3 years for most agencies to transition Once implemented, it could take as long as 4 years to

reach enough savings to offset initial investments

Only an estimate, not based on a reliable estimate of government spending of an overall dollar figure

My thoughts: Science and IT

THANK YOU!

Question 1

What are the types of service models for cloud computingA. Software as a service

B. Platform as a service

C. Infrastructure as a service

D. All of the Above

Question 2

Early adopters are more likely to be grouped into which deployment cloud typeA. Public

B. Hybrid

C. Private

D. Community

Question 3

Which are benefits of transitioning to a cloud environmentA. Long term savings

B. Flexibility

C. Efficiency

D. All of the above