ROI calculators for cloud computing: Cracking the code

Amazon, Microsoft, Google and Rackspace all offer cloud ROI calculators, but can they really help you figure out the true worth of cloud computing?

Consulting firm and integrator Astadia joined the crowd this week with its version of a popular marketing tool, an online return on investment (ROI) calculator for customers interested in cloud computing. It's based on empirical results from Astadia's string of cloud customers and purports to show what a company might save by moving applications and infrastructure out of their basement and on to Force.com.

Cloud computing is an important option in the CIO's toolbox, offering potential immediate cost savings as well as strategic benefits.
Joe Weinman, VP of global strategy and product development for AT&T,

Astadia makes some bold claims, such as assuming an 80% reduction in network costs and 50% savings in storage costs and data center spending. However, in a nod to the complicated reality of IT spending, Astadia's calculator lets users adjust their expected level of savings if they wish. The company said it's a thumbnail view of the potential of cloud. Is it really that easy for an enterprise to figure out cloud costs?

"Different organizations with different workloads, architectures, cost structures, and usage demand profiles will need to use the cloud in different ways," said Joe Weinman, VP of global strategy and product development for AT&T and prominent author on economic theory in the cloud market.

Weinman's theories and logical proofs have been instrumental in validating the long-term vision of cloud computing and he's even built his own cloud calculators, which can be safely described as the most comprehensive and rigorous economic modeling tools for cloud by a long margin.

Weinman said that by now every CIO should be taking cloud into account when they plan spending, and they probably are: Most recent surveys indicate high levels of awareness on cloud and moderate levels of adoption, mostly in the more mature Software as a Service (SaaS) segment. That's only natural, said Weinman, since CIOs should be carefully balancing clear advantages of cloud service, like business agility and elastic spending, with existing IT operations. He said that evangelists should be taken with a grain of salt, as cloud will not replace the enterprise data center immediately, but so should detractors, who pooh-pooh the public services model.

"The correct answer is somewhere in the middle: cloud computing is an important option in the CIO's toolbox, offering potential immediate cost savings as well as strategic benefits," said Weinman. But every IT department is going to have to find a different balance of inside versus outside to maximize their ROI.

Calculating cloud in context
That means all the cloud calculators out there need to be taken in context; the curious should make sure they understand the premise of each one, as well as the assumptions they are based on.

More on cloud economics:
Analyzing cloud computing's past and future

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Cloud doesn't always save money, says healthcare CIO

Astadia is perfectly up front about this. Astadia vice president Cory Vander Jagt said that the company bases projected savings levels on the use of Force.com, rather than a generalized assumption on using Platform as a Service (PaaS), because that's where Astadia has the most experience and therefore the most data. He also said Astadia's customers are doing online sales and marketing applications. That's seen as a classic use for cloud computing, and something Force.com specializes in. If you wanted to use Amazon Web Services (AWS) or Azure, you would not see the same kinds of savings.

"This has been verified by three or four independent research projects by now -- we see four or five times faster development on Force.com," Vander Jagt said.

Astadia made the calculator adjustable for those that didn't want Force.com; the firm will apply clients with any of the basic cloud platforms but said costs go up as the level of specialization goes down, and it partners with any number of services to make up the gap.

Vander Jagt said they are seeing a rapid surge in interest from IT operations as well as app dev and need to be able to show benefits to cloud in other ways.

"We're having many more frequent conversations with IT and the infrastructure folks," he said. The Astadia calculator, of course, is hosted on Force.com.

What about other cloud calculators?
Amazon Web Services Simple Monthly Calculator will show you sample accounting for each of AWS' proliferating services, including "Premium Support." It has nowhere to add in software costs beyond the basic operating system, which is included in Amazon EC2, or work hours to manage servers, since Amazon does nothing for you on that front. You'll have to tack those figures on yourself.

Different organizations with different workloads, architectures, cost structures, and usage demand profiles will need to use the cloud in different ways.
Joe Weinman,

Azure's calculator (link boxed in right column) was built by marketers Alinean, and yes, it uses Azure. It'll even export your results to Excel, for those who need everything numbers-related in a spreadsheet. It assumes frank lack of foreknowledge on the part of the user, walking everyone through the process of selecting appropriate Azure services (and collecting plenty of marketing info). In the end, it presents a rosy scenario that Microsoft explicitly disclaims.

"You should not view the results of this report as a substitute for engaging with a third party expert to independently evaluate you or your company's specific computing needs. The analysis report you will receive is for informational purposes only," it reads. It also assumes a rough estimate of $20,000 per year to manage a server on-premise, and about $4,000 for the Azure equivalent.

Other options for the cloud curious
Other calculators run the gamut of genuine usefulness for an IT buyer. Rackspace's calculator is a minimalist expression of the genre. Google's Go Google calculator is much like the company itself: elegant, spare, fun, heavily biased against Microsoft and apparently unaware that IT has been around longer than 10 years.

Federal IT news agency MeritTalk has made a good faith effort with their Savings Calculator. The federal IT market has some unique challenges, and MeritTalk said it used existing federal metrics and guidelines, as well as industry input, to build the calculator.

Cloud platform startup Elastra has a thumbnail calculator that's a little like Astadia's and adjustable by the user. Startup Apptio will actually sell you a calculator application designed to calculate cloud, since they say that variable pricing and lightning fast vendor changes are part of the fundamental nature of cloud computing.

In the end, these are no substitute for old fashioned analysis and budgetary elbow grease (with the possible exception of Apptio, since it's a business application and not a marketing tool). That said, these ROI calculators are a good way to get an idea of what cloud could mean to you, along with what the different big players in cloud want you to think about.

Carl Brooks is the Technology Writer at SearchCloudComputing.com. Contact him at cbrooks@techtarget.com.

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