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Jonathan_W
Does the Cloud ROI Stack up?
Justin Pirie@justinpiriehttp://[email protected]
Cloud Circle- LondonApril 20th 2010
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Analyst Blogger
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Community Manager
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Social Media Influence
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Where I work
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Benefits of Google Apps
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For Microsoft Exchange
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Over 500,000 users can’t be wrong!
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Why we’re really here...
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William Vambenepe
SPI stack
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IaaS ROI is about Utility Premium
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A Sl
ight
Adj
ustm
ent
http://www.flickr.com/photos/rustyboxcars/ CC BY-SA 2.0
William Vambenepe
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Look back
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Guess who?
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Yes, them
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Need new goggles
@kobak
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Empowers
Jan Michael Ihl
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Traditional IT Dept.
@appirio
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Business feeling about IT
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Outsourced IT Dept.
@appirio
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Business feeling about IT
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IT using Managed services
@appirio
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IT using Cloud
@appirio
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Fall in love again
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The Telegraph newspaper
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@lmacvittie
What next... Growing pains
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(user) Experience
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Security
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And now the science bit...
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Simplistic
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Again, Simplistic
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Simple ROI models are broken
° ρЯίтΛм ° [away]
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Compare Apples to Orangeshelgasms!
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Risk Adjust
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Need a methodology
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Apply it to email
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5 Customers, focused on a 5000 seat site
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Costs (non risk-adjusted, US$)
Initial Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Mimecast setup costs $3,000 $3,000 $3,000
Costs of internal labor (20 person days)
$7,680 $7,680 $7,680
Costs for ingestion of existing email archives (2 TB)
$42,060 $42,060 $42,060
Total SaaS fees per year ($60 per user per year)
$300,000 $300,000 $300,000 $300,000 $300,000 $1,500,000 $1,137,236
Mimecast support charges $12,000 $12,000 $12,000 $12,000 $12,000 $60,000 $45,489
TOTAL costs $52,740 $312,000 $312,000 $312,000 $312,000 $312,000 $1,612,740 $1,235,465
Work out Cloud costs
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Benefits (non risk-adjusted, US$) Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Email filtering cost savings $90,000 $90,000 $90,000 $90,000 $90,000 $450,000 $341,171
Legacy systems cost savings
$9,121 $5,787 $5,787 $5,787 $5,787 $32,270 $24,969
Total Cost Savings $99,121 $95,787 $95,787 $95,787 $95,787 $482,270 $366,140
Benefits (non risk-adjusted, US$) Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Replication cost avoidance $129,636 $65,996 $65,996 $65,996 $131,236 $458,860 $348,540
Archiving infrastructure cost avoidance
$367,160 $95,591 $95,591 $95,591 $398,631 $1,052,565 $797,411
Total Cost Avoidance $496,796 $161,587 $161,587 $161,587 $529,867 $1,511,425 $1,145,951
Cloud Benefits- Savings and Avoidance
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Benefits (non risk-adjusted, US$) Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
IT help desk productivity
gains $7,744 $7,744 $7,744 $7,744 $7,744 $38,720 $29,356
eDiscovery productivity gains
$30,528 $30,528 $30,528 $30,528 $30,528 $152,640 $115,725
End user productivity gains $138,233 $138,233 $138,233 $138,233 $138,233 $691,167 $524,013
Total productivity gains $176 505 $176 505 $176 505 $176 505 $176 505 $882 527 $669 094
Benefits (non risk-adjusted, US$) Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Business continuity — move of a branch office
$472,727 $472,727 $429,752
Business continuity — email availability during unplanned downtime
$105,456 $105,456 $105,456 $105,456 $105,456 $527,280 $399,761
Total Business Continuity $578,183 $105,456 $105,456 $105,456 $105,456 $1,000,007 $829,513
Cloud Benefits- Productivity + Specific
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Benefits (non risk adjusted, US$)
Year 1 Year 2 Year 3 Year 4 Year 5 Total PV
Cost avoidance $496,796 $161,587 $161,587 $161,587 $529,867 $1,511,425 $1,145,951
Business continuity $578,183 $105,456 $105,456 $105,456 $105,456 $1,000,007 $829,513
Cost savings $99,121 $95,787 $95,787 $95,787 $95,787 $482,270 $366,140
Productivity gains $176,505 $176,505 $176,505 $176,505 $176,505 $882,527 $669,094
TOTAL benefits $1,350,605
$539,336 $539,336 $539,336 $907,616 $3,876,229 $3,010,698
Cloud Costs + Benefits
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Benefits (non risk adjusted, US$)
Year 1
Number of users 100
SaaS Costs ($60 x 5 years) $30,000
Cost of On-premise $76,640
Flexibility Benefit $56,649
Flexibility scenarios e.g. New Office
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Risk Adjust
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Totals- Non- risk adjusted
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Totals- risk adjusted
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Year 1 Year 2 Year 3 Year 4 Year 50
200
400
600
800
1000
1200
1400
MimecastOn-Premise $'
000
Cloud Annual Investment
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Year 1 Year 2 Year 3 Year 4 Year 50
500
1000
1500
2000
2500
3000
3500
MimecastOn-Premise $'
000
Cloud Cumulative Investment
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“100% ROI in less than 100 days.”
Chris Petrie, IT Director
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“A "SaaS first" policy is being enacted in the majority of small and midsize businesses”
Feb 2010
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Trust but verify
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“You have to dive in to learn the lessons”
Mark Brewer, CIO
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Elephant in the room....
David Blackwell (Dilettante)
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Network Effects and Ecosystems