The Business Case For Private Cloud Services

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1 Velocity Technology Solutions / April 2015 This Private Cloud Services guide will: Define a common vocabulary around Private Cloud Service Providers Describe how Private Cloud Services can reduce the total cost of ownership (TCO) Provide a TCO analysis of a traditional vs. private cloud model Identify ways in which a Private Cloud Service model decreases risk Identify ways in which a Private Cloud Service model increases productivity

2 Defining Private Cloud Service Providers TABLE OF CONTENTS Defining Private Cloud Service Providers 3 A Great Time To Move To The Private Cloud 4 How Private Cloud Service Providers Lower TCO 5 70% of private cloud adopters use third parties to manage their environments 1 A Private Cloud Service Provider offers application hosting and software services available through a private cloud dedicated to a single enterprise. A Public Cloud Service Provider uses commoditized components to deliver generic services co-mingled across industry, domain and application. A TCO Analysis: Traditional On-Premise vs. 6 Cloud Service Provider How Private Cloud Service Providers Reduce Risk 8 10 Ways Cloud Service Providers Reduce Risk 9 How Private Cloud Service Providers Increase Productivity 10 The adoption of private cloud services is expected to grow by over 40% in 2015, more than 2X as fast as the growth of public clouds Public Cloud Growth 40% 2015 Private Cloud Growth 2x faster growth than public clouds Characteristics of a Shared Service Model 10 In 2010 the global private cloud market was worth $8 billion In 2013 the global private cloud market was worth $32 billion By 2018 the global private cloud market is expected to be worth $69 billion Private Cloud Customer Research Report, Technology Business Research, 2014, 2 Private Cloud Customer Research Report, Technology Business Research, 2014, 2 3

3 A Great Time To Move To The Private Cloud How Private Cloud Service Providers Lower TCO ORACLE EBS HYPERION PEOPLESOFT The cost savings achieved through a private cloud model has sparked its rapid adoption. There are a number of factors that contribute to the lower TCO of private cloud services. Traditional On-Premise Large upfront capital expenditure for hardware and migration Private Cloud Zero to minimal upfront costs When you need an interim Oracle Cloud solution When you need specialized resources now When you are planning an upgrade Multiple experts across a wide skill set for solutions - MM, SD, FICO, etc. are cost prohibitive Fractionalizes the cost of industry experts across multiple clients Private Cloud Service Providers can accelerate the cost benefits of moving to the cloud without feeling rushed to upgrade or convert to the Oracle Cloud. This is a good option when business situations force customers to delay their upgrade to the Oracle Cloud. Private Cloud Service Providers have the resources with specialized Hyperion skills organizations need, when they need it, and at a much lower cost. The unique configuration requirements and complexity of Hyperion requires specific skillsets that are not necessarily transferable to other enterprise applications. Additionally, specialized Hyperion resources reduce the strain on in-house IT resources who should be dedicated to other businesscritical goals. Organizations considering a PeopleSoft upgrade will benefit from a move to a Private Cloud Service Provider. Upgrading an application is the perfect time to make a move to the cloud in order to reduce costs, gain efficiencies and simplify maintenance. For companies who need to spend a few years on the version they have, cloud models provide operational and maintenance benefits that can significantly reduce costs compared to an on-premise solution. Recurring costs to refresh, fix and maintain systems Low, predictable monthly costs for 5, 7 or 10 years Long processes for new installations Cuts timeline by 25-40% due to hardware procurements, provisioning, etc Limited agility and flexibility in response to changes and demands on environment, space and resources Leverage economies of scope and scale (pay for only the environmental footprint and staff you need at any given time) 4 5

4 A TCO Analysis: Traditional On-Premise vs. Cloud Service Provider See how the TCO of Oracle applications differs between cloud and traditional models over a 5 year period. TRADITIONAL COST MODEL PRIVATE CLOUD MODEL BUDGETARY COMPONENT DESCRIPTION PAYMENT TIMING ESTIMATE 3 PAID TO: BUDGETARY COMPONENT DESCRIPTION PAYMENT TIMING ESTIMATE PAID TO: Hardware Hardware for server Month 1 + Refresh $150k Hardware Vendor environments every 3-5 years Hosting Hosting in data center, Monthly $15k-20k/mo Hosting Vendor including 3 environments + DR Hardware Hardware included 1 Upfront Fee + $550k Upfront Application Service Fixed Monthly Fee + $59k/month Provider Hosting Private cloud hosting in data center, including 3 environments + DR Compass Consulting fees paid for Month $45k Application Consultant (Roadmap Engagement) package selection Compass (Roadmap Engagement) Consulting fees paid for package selection Implementation Consulting fees paid monthly Equal Installments $1,100k Application Consultant Months 3-14 Implementation Implementation included Project Expenses Estimate of travel Equal Installments 15% of Application Consultant material expenses Months 1-14 Consulting Fees Support Hire 4 resources with Annually $100k per resource Client P&L new ERP knowledge x 4 resources Support Support included 5 YEAR TOTAL COST OF OWNERSHIP $4,090,000 5 YEAR TOTAL COST OF OWNERSHIP $4,667,000 What business improvements could you make with an extra $577,000? 3 Please note that budgetary estimates do not necessarily reflect actual costs for the management of your specific application. 6 7

5 How Private Cloud Service Providers Reduce Risk 10 Ways Cloud Service Providers Reduce Risk 1 Ensure your ERP system stays current with the most recent releases and up-to-date with industry-specific requirements (e.g. tax updates required for payroll). Risk [risk] The probability that a natural event, resource or system could exploit a vulnerability in the application or ERP system that causes business loss Plan for the impacts that updates and patches have on your ERP system configuration, customization and performance. Test your applications based on your requirements in the development environment and after the updates are applied in production. Identify customizations and manual processes that can be eliminated as a result of the updates or patches. 5 Deploy best practices based on how other clients across a wide range of industries and platforms are leveraging the latest updates to improve their processes. According to a leading technology market research firm, enterprise businesses in North America lose as much as $100 million per year in downtime related to information and communication technology. 4 Larger organizations may be apt to manage the infrastructure, implementation, upgrades, updates, end-user support and functional support required for large ERP applications. But for many businesses, in-house application management places a heavy burden on internal IT resources, especially at the point of major upgrades Fully manage the cut-over from the development environment to production. Provide analytics to monitor segregation of duties and make business process optimizations and manage compliance. Eliminate HR risks associated with the knowledge transfer and ramp-up time required with any new personnel or turn over within your business technical and functional teams. Ensure compliance with changing and complex requirements for your industry. 10 Provide disaster recovery (DR) services in the event of a natural disaster. 4 Infonetics:Technology and Network Downtime Costing Businesses $4 Million a Year, February 2, 2015, Market Wired, How Private Cloud Service Providers Ensure Application Compliance Control in a virtual private cloud Focus on ITL Software-defined environments Third-party audit and attestation Penetration testing Advanced logging and monitoring Disaster Recovery Data Center Requirements If you are considering a private cloud service provider for DR services, check to see if their data center locations meet the following criteria: FEMA region coordination (MDR/EDR) Network bandwidth Capacity planning Optimization Dedication/syndication levels Storage management Each DC connected to 2 other DC 8 9

6 How Private Cloud Service Providers Increase Productivity Progressive organizations realize that placing resources on the tasks best fit for their skill set increases productivity. Private Cloud Service Providers have resources specifically trained in your application within your industry to manage your applications. Private Cloud Service Providers can: Free talented resources to focus on strategic initiatives vs. tactical tasks associated with managing software applications and environments. Manage multiple and simultaneous demands of various businesses within your organizations (e.g. HR, Finance & Payroll) through a shared service model. Provide comparison analytics for similar-sized organizations in your industry to identify bottlenecks that prevent streamlined processes and monitor compliance and risk. Characteristics of a Shared Service Model 1. Alignment of subject matter experts (SMEs) 2. Guaranteed service levels 3. Platform agnostic best practices and thought leadership 4. Preparation for business events (e.g. an acquisition) 5. Ticketing system 6. Periodic strategy meetings 7. 24/7/365 call center 8. Service transparency 9. Eliminate risk associated with staff turnover Operational expertise, scalability and affordability just are some of the reasons more companies are turning to Private Cloud Service Providers. It s a trend that is likely to continue as IT environments grow more complex and resources become increasingly burdened. Velocity Technology Solutions, Inc. is a leader in enterprise and business application hosting services which are fully-managed and protected within a virtual private cloud. Velocity lowers operational costs, provides world-class customer experiences, and delivers application access at top levels of performance and availability. Velocity s expertise managing software 24/7, combined with its proprietary infrastructure design and cloud management platform, guarantee the availability, security, and control over software. Velocity is the trusted partner for rapidly deploying application software into a secure and resilient virtual private cloud. Velocity is headquartered in Charlotte, North Carolina with facilities in North America, Europe, and Asia. Velocity is a portfolio company of Silver Lake Sumeru, a global leader in private equity investments in growth-oriented technology and technology-enabled companies

7 Velocity Technology Solutions 1901 Roxborough Road, 4th Floor Charlotte, NC Phone: Fax: VelocityCloud.com Velocity and the Velocity logo are registered trademarks of Velocity Technology Solutions, Inc Velocity Technology Solutions, Inc. All rights reserved. All other trademarks are the property of their respective owners BCPRIVCLOUD

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