D2 3 Computing e-Infrastructure cost calculations and business _models_vam1-final

e-­‐FISCAL: www.efiscal.eu
EC Contract Number: 283449
peak loads) could be justified by the additional revenues or other benefits (such as increased user satisfaction
leading to improved retention of clients).
On the other end of the scale, in case the utilisation rate of the in-­‐house infrastructure is very low (e.g. 10%), it is
most likely a good idea to consider outsourced solutions. However, there are two issues to consider in the
process:
• What the actual savings potential is and when it can be realised. Avoiding the purchase of new servers brings
in savings, however some investments (e.g. related to building a server room) tend to be sunk costs, i.e.
impossible to recover despite early decommissioning. In case the sunk costs dominate, studying the ways the
productive utilisation rate of the in-­‐house infrastructure could be increased might be useful alternative
strategy. For example contributing resources for educational or charitable purposes is a relatively common
marketing strategy that could be applied.
• Whether the outsourced solution fulfils all the functional and non-­‐functional requirements, and whether lack
of in-­‐house infrastructure will have a negative impact on staff motivation and skills, or on development,
training and support activities. For technical performance, consider benchmarking.
Considerations for an organisation using (mainly) Cloud resources the situation is perhaps slightly more
straightforward. Investing in in-­‐house IT infrastructure makes sense in situations where there is sufficient volume
and it is possible to identify a baseline load that seems to remain stable. The potential benefits are most obvious
in cases where the volume of activity is very high and the business model of the organisation makes cost of service
provision critical in terms of competitiveness or profitability.
The case of in-­‐house IT infrastructures that fall into neither of the extremes require case by case analysis that
usually needs a broader analysis than just review of costs of different options.
5.7.2 Cost structure, its heterogeneity and size of the infrastructure
The e-­‐FISCAL study indicated that OPEX costs dominate, with the personnel costs typically being the largest
category. In the e-­‐FISCAL material this was true even in large scale infrastructures (although other studies have
shown cases of large-­‐scale installations where the personnel costs have been a relatively minor cost category).
Based on the results, scaling up may sometimes brings in economies of scale, however, case-­‐by-­‐case analysis is
important. Once moving beyond very limited IaaS offering with (explicitly) minimal support contract, the actual
applications and services provided may change the cost per core hour considerably (i.e. difference between
offering IaaS solution and IaaS offering with support and consulting). Especially when launching new services or
entering new markets, it may be difficult to estimate how much of additional manpower is needed in marketing,
user support and consulting to gain critical mass. Based on literature review switching to an outsourced solution
does not seem to bring in major savings in manpower expenditure, even on relatively “technical” management
tasks.
The ambiguous results of the “economies of scale” analysis as well as lack of demonstrated dramatic manpower
savings may be indications of the relatively low maturity level of the IaaS marketplace. Standards and best
practices are evolving quite rapidly and “standard categories of use cases” are still in the process of forming,
leading to uncertainty and management overhead on the “client side”. Development in these areas should be
monitored, as they may change the cost structure of outsourced solutions while at the same time making the
overall costs more predictable.
e-­‐FISCAL : Financial Study for Sustainable Computing e-­‐Infrastructures
Deliverable D2.3 – Computing e-­‐Infrastructures cost estimation and analysis – Pricing and
Business models
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