IT-CAST 2015 Cloud Total Ownership Costing: Considering the Technologies, Costs and Benefits

Transcription

1 IT-CAST 2015 Cloud Total Ownership Costing: Considering the Technologies, Costs and Benefits Daniel D. Galorath, CEO Galorath Inc. Steven Woodward, CEO, Cloud Perspectives Portions Copyright Cloud Perspectives 2015; Potions Copyright Galorath Incorporated 2015

2 Key Points Cloud Computing Is Becoming Pervasive Cloud full of challenges and opportunities Cloud Is not necessarily less expensive from a total cost of ownership viewpoint 2

3 USA Background Cloud First save $, agility, innovation, time to value Optimization of IT resources Cash for Clunkers was a nudge Approach Cloud First focused ID and migrate 3 services to the cloud Close 800 data centres 25 point plan FEDRAMP. Provides level or assurance but you pay for it NIST as an enabler, fostering private and public sector participation (NOTE: SECURITY WAS IDENTIFIED AS A KEY FOCUS AREA) 3

4 GAO Reported Cloud Challenges The GAO identified several common challenges to cloud computing. Each of these has cost as well as technical ramifications: 1. Meeting Federal Security Requirements, 2. Obtaining guidance, 3. Acquiring knowledge and expertise, 4. Certifying and accrediting vendors, 5. Ensuring data portability and interoperability, 6. Overcoming cultural barriers, and 7. Procuring services on a consumption (on-demand) basis Copyright Galorath Incorporated 4

5 Other Governments & Private Sector EU and Countries UK Australia New Zealand China Malaysia Canada State, Provincial & Municipal Governments Private Sector (Banks, Entertainment, etc.) 5

6 NIST Definition Cloud Essentials National Institute of Standards and Technology ( Model for enabling convenient, on-demand, network access to a shared pool of configurable computing resources (networks, servers, storage, applications, services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. 6

7 NIST Terms Hosting: External or Internal Three Service Models -Software as a Service (SaaS) - Platform as a Service (PaaS) - Infrastructure as a Service (IaaS) Four Deployment Models -Private cloud -Community cloud -Public cloud -Hybrid cloud Five Essential Characteristics -On demand self-service -Broad network access -Resource pooling -Rapid elasticity -Measured service 7

8 Combined Conceptual Reference Diagram updated

9 The Rental Model Beware cloud vendors will upsell too 9

10 My Rental Buy Rent Lease Public Transit 10

11 My Rental Experience Economy Car Without Air Unlimited Mileage Automatic 21.74/ Day 4 Days Taxes Fees Total Opps They forgot to mention the extra costs Ask questions & due diligence or you will be surprised E.G free backup and $$$$ restore 21.74/ Day 4 Days Taxes Fees Quoted Total Ireland Insurance N. Ireland Insurance Airport Fee Actual Total

12 Inhouse Replacement Server: Dell PowerEdge T430 - $3,943 Back-up Software License and agents (2 options) 1. Symantec Back-up Exec: $2,822 (includes 2014 vr and 4 agents) 2. Dell NetVault - $2,108 (includes 1 TB capacity) $8,873 Cloud $6,428 annual 2015 Galorath Incorporated 12

13 WHAT THE!?!? $6428 per year for a cloud solution. $1775 per year for an in-house solution (5 year life) Galorath Incorporated 13

14 Cloud Modeling Helps Clarify Boundaries Using IFPUG (ISO/ IEC 20926) and other similar EA Frameworks helps model and quantify cloud services SaaS PaaS IaaS Any modeling helps. Can import / Export functionality from frameworks 14

15 Services Inverted L One Product Can Cross Services Business Facing Functions Development Platform Functions PaaS SaaS Service Facing Functions Infrastructure/ Resource Functions IaaS $1000/ Service * Canadian $ 2012 $240/Service* $3000/Service* 15

16 Cost vs Functionality New Deployment (Enterprise App) $2000* Cost $ Per Function/ Service From $3000 to $300 per Service Traditional SaaS $2 * Canadian $ Functionality/ Service Volume Deployed 2000 Private cloud or COTS about same as on- premise 16

17 Computing usage Cloud Optimizes Bursting.. This is one Case For Cloud = capacity 2015 Galorath Incorporated 17

18 Schedule vs Functionality New Deployment (Enterprise App) 600 Days to Deployment From 16 months to 60 days 10 1 Traditional SaaS 1 Functionality Volume Deployed 2000 SaaS acts much like COTS.. Good fit: deploy fast 18

19 Observation - Control Costs More Patience SaaS Example Deeper Pockets Cost $ Schedule Days Less Control/Customization More Control/Customization Take SaaS as is costs can be low Customization drives cost dramatically just like COTS 19

20 Galorath Force.com Using SEER: FAA Funded Study Findings Effort reduction from 30% to 40% over JAVA About 80% reduction in the actual development effort for appropriate applications Point-and-click operations to support prototyping reduced requirements & design from 10% to 25%. Testing reduced due to robustness of built in capabilities reduced effort by an estimated 5% to 20%. Due to efficiency of PaaS development environment Rather than the cloud generally 2015 Copyright Galorath Incorporated 20

21 Observation - Security Costs More Patience Traditional Software Deeper Pockets Cost $ Schedule Days Less Secured More Secured Often cloud security features reduce cost vs security development 21

22 Building Secure Systems Is Very Costly Building software cost can be massive Depending on the cloud supplier s investment in security and your organizations investment Cost of breaches can be worse 2009 Copyright Galorath Incorporated 22

23 Observation Cloud Often Secures at Lower Price Points More Patience Software Leveraging Secured Cloud Deeper Pockets Cost $ Schedule Days Less Secured More Secured Cloud security solutions may reduce costs e.g. tokenization, continual sniffing 23

24 Bad Estimates Are A Root Cause of Project Failure An estimate is the most knowledgeable statement you can make at a particular point in time regarding: Effort / Cost Schedule Staffing Risk Reliability Estimates more precise with progress A WELL FORMED ESTIMATE IS A DISTRIBUTION 2015 Copyright Galorath Incorporated 24

25 Watch Total System Requirements: IT Systems Total Ownership Costs; 60+% Can Be Infrastructure & Services Not considering total costs (software labor, IT infrastructure and IT Services, etc.) is a major program risk

26 Total Cost of Ownership When cloud computing is a good fit, Total Cost of Ownership (TCO) over a 10 year period can realize 75% in savings When cloud computing is perceived as a panacea, with assumed savings, it s buyer beware! Transparency and Governance are even more important in the cloud to establish trust. High Availability: Replicate servers pay double for hot replication servers in multiple locations 2015 Copyright Galorath Incorporated 26

27 SaaS and COTS Are Costly To Organizations Commercial application program or collection of programs developed to meet the needs of a variety of users, rather than custom designed for a specific organization Many are enterprise applications Often allows / requires customization Examples: SAP; Rational PPM, SEER for Software; Microsoft Excel, CA Clarity, Oracle Business Suite "One-third [of the budget] has to go to testing. Don t ever short change testing. Everyone always underestimates it, and says it s the last thing to worry about. Don t do that! - Jim Larson, consultant for communications solutions provider SaaS doesn t reduce testing effort compared to on- premise 27

28 Cascading SLA Example End Customer SLA End Customer Carrier SLAs Measurement and Remediation? Liability and Accountability? SLA SLA Uses SaaS Solution SLA IaaS Solution SaaS Solution Carrier Cascading relationships make SLAs nearly impossible.. New technologies drop SLA performance before they mature 28

29 Some Potential Cloud Black Swan Costs Security & Breaches: Anticipate growing Malicious attacks and accidental data loss Outages: late hours downtime between 13 major cloud carriers. Cost the customer base about $72 million (International working group on cloud computing resiliency) Learning curve: Successful cloud model takes knowledge around multiple technological disciplines. Once in place, however, managing can also be issue Vendor lock-in: Migrating cloud environment to anther provider difficult Not often considered in decision analyses Data portability and porting costs Software modification Costs (PaaS) Software Setup (Saas) 2015 Copyright Galorath Incorporated 29

30 Parametrics Modeling Can Estimate Both Software and IT Costs Size, approach, help desk, training, and many more IT / software cost modeling functions 30

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32 SEER-IT Estimate (Internal Cloud) Copyright Woodward Systems Inc All Rights 32

33 New Business Model for Cloud 1. Pricing Models 2. Costing Models 3. SAs and SLAs 4. Accelerated Opportunities 5. Reuse via Services 6. Brokering vs Hosting 7. Jobs Changing, NOT Disappearing 8. Cultural Change Cultural change as much as technical 33

34 Key Points Cloud Computing Is Becoming Pervasive Cloud full of challenges and opportunities Cloud Is not necessarily less expensive from a total cost of ownership viewpoint 34

35 Contact Information Steven Woodward CFPS, CSQA Dan Galorath x614 35