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

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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 76
e-‐FISCAL: www.efiscal.eu EC Contract Number: 283449 5.7.3 Green IT Any organisation providing services where IT is in a visible role it is becoming advisable to show awareness of the basic metrics related to Green IT. Being able to discuss PUE value of the infrastructure used (whether in-‐house or outsources) is most likely becoming a relevant corporate social responsibility and marketing issue. Monitoring the developments of more multi-‐faceted Green IT metrics and initiatives is also an important trans-‐disciplinary area where the communications, business and IT experts should all be involved. When considering establishing large-‐scale in-‐house infrastructures, developments related to compliance and regulatory issues may become an issue that should be taken into account as part of the cost comparison between different options as well as capacity planning. 5.7.4 Specific considerations for SMEs In the smaller SMEs some of above steps might be difficult to implement. It may be that (at least in the initial stages of the company) there are no dedicated IT staff members, or the ways to track the use of their time may not be suitable for analysis of the IT-‐specific issues (e.g. if the reporting is based on client projects instead of IT management functions). However, even in this case the e-‐FISCAL results can be used to estimate costs for planning purposes. The tools and supporting material can also be used to show awareness of IT cost issues with minimal effort and in a way that is grounded on published methodology. For example when negotiating with new investors this would ideally allow both parties to focus on business strategy and revenue models. e-‐FISCAL : Financial Study for Sustainable Computing e-‐Infrastructures Deliverable D2.3 – Computing e-‐Infrastructures cost estimation and analysis – Pricing and Business models 77
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D2 3 Computing e-Infrastructure cost calculations and business _models_vam1-final

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