As the CIO you are spending $10 million per year in data center costs for the su
ID: 460121 • Letter: A
Question
As the CIO you are spending $10 million per year in data center costs for the supply chain logistics of your furniture and home product distribution business. You have reduced these costs 25% in the last 3 years and also enjoyed two bonus checks on your achievement. Your expenses include physical hardware, network equipment, telco charges, data center rental, security, people, management software, etc. A cloud services company offers you data center services that can save you 80% of the annual IT cost. Your transition cost will be $5 Million one time for the programming required to make the transition. After that you can get rid of all the data center costs and most of the people managing the data center plus everything would be on the cloud and no more HW and telco costs. You are stunned and don't know where to begin. Your CEO, Sally A)WJUC Rid is old school and isn't easy to persuade. You decide to convince her to make the move to the cloud - How will you persuade Sally to make this move?Explanation / Answer
Cloud servicing may lead to cost saving upto 80% of present cost, which is most cost effective.When it comes to technology spending and creating an IT budget, a quick look at the economy is often enough to get a rough idea of whether budgets are expanding, contracting or staying flat -- and this year is no exception.
I would recommonded below points to Sally and persuade to implement Cloud computing due to this advantages
ofcourse it will lower the cost :
Cloud computing brings natural economies of scale. The practicalities of cloud computing mean high utilization and smoothing of the inevitable peaks and troughs in workloads. Your workloads will share server infrastructure with other organizations' computing needs. This allows the cloud-computing provider to optimize the hardware needs of its data centers, which means lower costs for you.
Cloud computing uses less electricity. That's an inevitable result of the economies of scale I just discussed: Better hardware utilization means more efficient power use. When you run your own data center, your servers won't be fully-utilized (unless yours is a very unusual organization). Idle servers waste energy. So a cloud service provider can charge you less for energy used than you're spending in your own data center.
Whenever I analyze organizations' computing costs, the staffing budget is usually the biggest single line item; it often makes up more than half of the total. Why so high? Good IT people are expensive; their salaries, benefits, and other employment costs usually outweigh the costs of hardware and software. And that's even before you add in the cost of recruiting good staff with the right experience.
When you move to the cloud, some of the money you pay for the service goes to the provider's staffing costs. But it's typically a much smaller amount than if you did all that work in-house. Yet again, we have to thank our old friend:economies of scale.
(In case you worry that moving to the cloud means firing good workers, don't. Many organizations that move to cloud computing find they can redeploy their scarce, valuable IT people resources to areas that make more money for the business.)
When you run your own servers, you're looking at up-front capital costs. But in the world of cloud-computing, financing that capital investment is someone else's problem.
Sure, if you run the servers yourself, the accounting wizards do their amortization magic which makes it appear that the cost gets spread over a server's life. But that money still has to come from somewhere, so it's capital that otherwise can't be invested in the business—be it actual money or a line of credit.
When you run your own servers, you need to buy more hardware than you need in case of failure. In extreme cases, you need to duplicate everything. Having spare hardware lying idle, "just in case," is an expensive way to maximize uptime.
Instead, why not let a cloud computing service deal with the redundancy requirement? Typical clouds have several locations for their data centers, and they mirror your data and applications across at least two of them. That's a less expensive way of doing it, and another way to enjoy the cloud's economies of scale.
Cloud computing is now a proven, mainstream alternative for SMBs and SoHo. Moving to the cloud will save you money, not just for your cloud security needs, but for many other types of data center workloads
Present scenario In Million Cost post Cloud Implmentation in Million IT Cost IT Cost Data center cost $10 $2.00Related Questions
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