Traditionally, large IT organizations have utilized their own

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1 White Paper Cloud Identity Services Cloud Identity Services TCO Substantially Reducing Cost with Cloud Identity Services Traditionally, large IT organizations have utilized their own resources to design, build and launch new applications using commercial-off-the-shelf software. This process, in part, has taken advantage of extensive capital expenditures in IT Service Management (ITSM). The primary function of IT was to provide services based on a command model of budgeting in a Shared Services model or by individual business unit contribution or by cost allocation budgeting. IT built these solutions from the ground up, with customizations to meet the needs of the organization and with the intent of creating a competitive advantage. However, this was often achieved with long lead times and often with a longer time to value. Today, with changes in the cloud, social and big data technologies, workforce culture, and evolving business models, IT must achieve traditional goals while at the same time speeding time to value from months to weeks. Many of the security needs are common across enterprises today, and the cloud market has now created solutions to address these common requirements. These solutions leverage common processes and expertise created at one organization, rather than creating these uniquely for every organization. The result is savings in time, cost and risk, and increased security. Objective TThis document presents general guidelines for developing a TCO comparison for two types of enterprise identity management implementations: a customized software solution and a cloudbased solution. Comparing the TCO for each approach will enable the decision maker to choose the best approach. The two approaches are: Cloud-based Identity Management Solution A model designed to deliver business applications and processes anywhere, anytime through an external service provider like Covisint. This model has a subscription-based pricing model and is configurable using APIs. Customized Software Solution A traditional model where an internal IT team develops a custom solution using a standard software package. The case study in this document demonstrates that the customized software solution not only requires a higher upfront capital investment, but costs more than twice a cloud-based solution over a three-year period. Why Move to the Cloud? Cloud solutions are being adopted at an accelerated rate by enterprises around the world. According to Forrester Research, the market for Identity Management Services will reach $12.0 billion by A large percentage of those sales will be delivered through cloud-based Identity Management solutions 1. 1

2 Cloud-Related Security Budgets Are Growing Strongest Cloud computing is driving shifts in security investment towards access control, security management, identity management, and firewalls, all of which show indications of growing most strongly compared to other budget areas. Data collected from contacts at large enterprises show that three-fourths budgeted for cloud-based IDM solutions in How customers benefit from cloud-based IDM solutions There are many benefits of using a cloud-based approach for Identity Management. Using Covisint Identity Services, end users experience the following benefits: Reduced cost and complexity associated with managing identities and access privileges across constituents Master deployment versus in-house or on-premise Seamless integrations with systems and applications; simplified endpoint connectivity and collaboration Anytime, anywhere access to applications for users across the extended enterprise Improved end-user experience via single sign-on to multiple systems and applications Simple compliance with regulations and enterprise policies for users inside and outside your enterprise Unparalleled security, service; and access to a global help desk. Increase the value you receive from your ITSM investments In addition to these benefits, analyst firms such as Forrester Research have said that enterprises are embracing multiple cloud-based solutions that bring other benefits to the organization such as lower cost and increased efficiency of implementation. The cloud-based approach is quickly becoming an integral part of the enterprise IT toolkit. However, the cost for licensing a cloud-based solution is very different than traditional customized software solution projects. It requires a level of understanding on how the models differ and then a TCO analysis can be conducted to ensure the cloud-based option is the most cost-effective for your business situation. Developing the TCO comparison There are several cost drivers to consider in developing a TCO comparison. This section will highlight the common cost drivers for examining several industry TCO models. For the purpose of comparing costs, a case study is presented. Cost estimates were developed from standard price sheets published on various web sites, which are referenced in the cost table. This cost comparison reflects the price differential that would exist for a standard portal implementation with the assumptions stated. Case study parameters In order to compare the cost of a custom software development solution (on-premise solution) to an application using a cloudbased model, the following guidelines were given to the cost estimation team of IT development professionals at Covisint: An Identity Services implementation for 10,000 licensed users with two end-point integrations. A custom software solution defined and implemented within 12 months time by a dedicated development team (general time required to custom design, integrate, test, tune and launch a new software solution). A cloud-based solution implemented in days using Covisint s multi-tenant solution. Customized software solution There are several costs to consider when developing a customized software solution. These can be categorized as capital expenses, operating expenses and other expenses. Capital expenses Software license and maintenance fees Includes the cost for RSA Federated Identity Manager with an unlimited number of endpoint integrations. License and Maintenance fees are based on list prices. This does not include the cost to upgrade to a new version of the software during the three-year period. Hardware Includes the number of servers and other capital equipment that will be dedicated to the solution implementation. 2

3 Operating expenses Custom coding, implementation and integration Includes the number of hours for full-time IT staff members/contract labor assigned to the identity management project. The staff members would be responsible for designing, integrating, testing, tuning and launching the solution based on a pre-defined requirements document from the business users. Once the application is fully operational (one year), the labor is generally reduced. Remaining employees would be cut or reassigned to other projects. Application support and maintenance fees Includes software maintenance charges for the servers and database software costs and maintenance fees. Server support Includes server support cost incurred with each of the servers used for the project. Systems administrators Generally includes full-time employees or hours dedicated to administering the system. IT and help-desk staffing Help-desk costs include support to cover Level 1, 2 and 3 calls. Also, includes resources required to maintain system documentation, support information, operational interfacing and reporting. End-user training Includes number of resources required to conduct initial training for all users of the system. Separate training sessions are scheduled with system administrators and users. Unscheduled maintenance and recovery Includes estimated cost for unscheduled maintenance and outage recovery. Other expenses User adoption and migration Includes the cost incurred to migrate users to the new solution and labor hours utilized as users adopt the new approach. Innovation The state of Internet-based, on-demand systems are forever changing. New technologies, regulations and interface options are being developed every day. These new models can quickly make what was once modern look old in a matter of months. Service-based offerings avoid this because the service provider must keep up with the latest models to remain in business. The Cloud solution For a cloud identity services solution, costs are all-inclusive and are based on a pay-as-you go model. The basic cost elements include: One-time setup fee Cost for setup and configuration of two endpoints. License fee per user Cloud-based models include a license fee based on number of users. Organizations may slowly ramp up to the desired number of licenses, or begin all users at the same time. Cloud vendors are responsible for complete delivery of Identity Services. The only responsibility of the IT organization is to ensure the necessary ports on the firewall are free and there is enough capacity available for end users to access the environment. The system is flexible and periodic updates are implemented without extensive involvement with the IT department. Covisint Cloud Identity Services Auditing and Reporting Includes the cost to do a full audit of the in-house identity management solution once per year and to provide reports for auditing purposes. Monitoring Includes the cost to monitor the application so problems with performance can be easily detected. Communications Monthly network charges for communications systems. Hosting Includes the cost to host the new application. 3

4 Total Cost of Ownership by Year $3,500 $3,250 Software Cloud $3,000 ($000) $2,500 $2,000 $1,500 $1,000 $500 $ $618 $614 $614 $29 $150 $150 $150 Setup Year 1 Year 2 Year 3 Based on the business case built for comparative purposes by Covisint. Cost differential by year. Total Cost of Ownership by Year - 3 Year Cumulative Software Cloud $6,000 $5,000 $4,483 $5,097 ($000) $4,000 $3,000 $3,250 $3,868 $2,000 $1,000 $ $479 $329 $29 $179 Setup Year 1 Year 2 Year 3 On a cumulative basis, costs for a customized software solution are estimated to be substantially greater than the Cloud Identity Services solution. 4

5 Total Cost of Ownership (TCO) Standard Identity Services Implementation Initial Cost Setup & Deployment Ongoing Costs Year 1 Year 2 Year 3 Total Cost Setup & Deployment, Yrs 1-3 Comparable Cost Analysis Capital Expenses: Software Licenses (RSA Federated Identity Manager and Maintenance) 1 Hardware 2 Operating Expenses: Custom Coding, Implementation, Integration 3 Application Support & Maintenance Fees 4 Outsourced Server & Support 5 System Administrator(s) (People) 6 IT and Help-desk Staffing 7 End-user Training 8 Unscheduled Maintenance and Outage Recovery 9 Other Expenses: Audit & Reporting 10 Monitoring & Communications 11 Hosting 12 Cloud Subscription Model Costs Identity Services Subscription Fee 13 Setup Fee (2 end points) 14 Total Costs (Cumulative) Software Cloud Software Cloud Software Cloud Software Cloud Software Cloud $620,124 No Capital $43,560 No Capital $54,450 No Capital $54,450 No Capital $772,584 No Capital $70,000 Expenses $ - Expenses $ - Expenses $ - Expenses $70,000 Expenses $2,560,000 $80,000 $80,000 $80,000 $2,800,000 $ - $143,000 $143,000 $143,000 $429,000 $ - $21,600 $21,600 $21,600 $64,800 $ - $120,000 $120,000 $120,000 $360,000 $ - $46,080 $46,080 $46,080 $138,240 $ - $15,000 $ - $ - $15,000 $ - $25,020 $25,020 $25,020 $75,060 $ - $100,000 $100,000 $100,000 $300,000 $ - $2,400 $2,400 $2,400 $7,200 $ - $21,600 $21,600 $21,600 $64,800 $ - $150,000 $150,000 $150,000 $450,000 $28,600 $ - $ - $ - $28,600 $3,250,124 $28,600 $618,260 $150,000 $614,150 $150,000 $614,150 $150,000 $5,096,684 $478,600 Assumptions: 1. Based on an estimate for an enterprise license with unlimited endpoints with RSA Federated Identity Manager. Software license and maintenance costs based on list prices. 2. Includes all hardware costs based on six servers. 3. Custom Coding, Implementation and Integration is based on using 12,480 hours for inital setup and 4,160 hours each year thereafter based on a cost of $125/hour pay and benefits. 4. Includes software maintenance charges for six servers and for database software costs and maintenance fees. 5. Based on average monthly server support for six servers at $300/server. 6. Based on appointment of one systems administrator with an average cost of $10,000/month. 7. Help-desk costs include 200 L1 calls, and 20 L2 calls per month and 20 percent of one FTE for L3 support and issue resolution. Also, includes 20 percent of an FTE to maintain documentation and support information and 10 percent of level 2 FTEs for operational interfacing and reporting. 8. End-user Training based on two training administrators at 20 percent time to develop and conduct initial training. 9. Unscheduled Maintenance and Outage Recovery based on $2,085 per month for application support and maintenance fees and ongoing server maintenance. 10. Based on one annual audit of IDM system at a rate of $100,000. Also includes reporting for the purpose of audit compliance. 11. Communication based on an average monthly network charge of $200/ month. Monitoring based on one monitor at a charge of $1,200 annually. 12. Based on an average monthly hosting cost of $1,800/month. 13. Based on 10,000 users for all 3 years. Estimated standard cost of $1.25/user per month. 14. Includes initial setup cost for the application using a cloud identity services model. 5

6 Other cost considerations In addition to line items included in the TCO analysis, there are several other cost considerations to take into account when building a customized software solution. These items are factored into the per user seat cost when deploying cloud identity services. Audit/regulatory compliance Complying with the various types of federal and industry regulations to avoid penalties (such as SOX, HIPAA, Safe Harbor, PCI DSS, SAS 70, etc.). Business and legal framework For information access and sharing of the new software solution. Authentication mechanisms/security protocols These must be developed and operated. Provisioning/de-provisioning mechanism Allowing a complex array of users to access and share information and address implications in other processes. Ability to innovate Keeping apprised of technology advances to innovate or revise solutions based on changes. Continuous help-desk support Dedicated resources to provide continuous help-desk support for missioncritical applications (24 hours x 7 days x 365 days). Business continuity planning Developing a disaster recovery plan that includes protocols for data backup and recovery, data retention, availability, failover, etc. Cost of governance A team must be formed, or person(s) identified, to provide governance for an internally developed solution, ensuring old content is removed, new content is loaded correctly, integrity is maintained, etc. Ease of integration Resources and time required to integrate the new solution with other applications. Implementation time/ramp-up cost Expense and time to ramp up and implement the new system, including cost of and process for accreditation. Amount of investment risk Investment risk is higher with a customized software solution and success is dependent on the quality of developers along with degree of dedication to the development project. Performance guarantees (SLAs) Service levels are not guaranteed for internally developed solutions. There is no way to offset financial penalties that may be incurred by the ultimate customer. Infrastructure development Cost to develop the infrastructure, such as headcount and the hardware/ software required to support the new solution (including content management system). Multi-tenant model The advantages of multi-tenancy are not realized with a single-tenant solution. Retaining identity and branding Cost for marketing and technical resources to develop the brand identity for the solution (if branding is desired). Scalable utility model An initial decision is required regarding scalability without prior knowledge on usage, which can lead to over-investing or under-investing due to inadequate information or lack of ability to predict future usage. Increased accessibility and productivity A behindthe-firewall approach limits access for users based on physical location. Cost of quality Additional time and resources required to support the quality of the solution. Defined, predictable spends Many times, with an internally developed software solution, the cost is higher than estimated due to scope creep and/or expenses incurred that were not discussed at the onset of the project. Why Covisint? Covisint has been delivering cloud identity services solutions for more than twelve years for industries including: manufacturing, healthcare, energy, financial services, business services, public sector and more. In addition to the cloud benefits highlighted in this document, Covisint offers several other advantages: Covisint s enterprise-class collaboration platform is delivered in a proven cloud services model. Advantages of this model include speed to implementation and innovation (30-60 days versus months), lower TCO (less upfront and ongoing costs) and reduced (mitigation of) risk. 6

7 Covisint has a well-integrated and complete security offering with a world-class identity management, federation and security model. Our framework connects disparate organizations, data and applications quickly and securely. Additionally, Covisint uses innovative user provisioning and de-provisioning tooling. Multi-factor authentication options are available if requested. Covisint uses a vertically focused approach with a multi-tenant model. This model allows Covisint to leverage knowledge and expertise across industries. Covisint delivers top-quality, vertically specific, value-added business processes and lead various industries in providing specific compliance and security implementations. For more information about Covisint Cloud Identity Services, go to identity.covisint.com. 1 Andras Cser & Jonathan Penn, Identity Management Market Forecast: , Forrester Research, Feb. 6, Guy Currier, IT Security & Network Security News & Reviews: Enterprise Security Spending Trends, Security-Spending-Trends /, Feb. 2, Covisint provides the leading cloud engagement platform for creating and enabling new missioncritical external business processes. Our solutions enable organizations to connect, engage, and collaborate with the critical external audiences that define their success -- including customers, business partners, and suppliers. Learn more at Covisint World Headquarters One Campus Martius Detroit, Michigan United States of America phone All Covisint products and services listed within are trademarks or registered trademarks of Covisint Corporation. Java and all Java-based marks are trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and other countries. All other company or product names are trademarks of their respective owners Covisint Corporation 7