Cloud Computing and SOA Convergence in Your Enterprise: A Step ...

Defining the Holistic Value 65
It appears that the cloud solution is much more cost effective when looking
at the core analysis. However, there are other things you need to consider
that are often left out of the model: integration, network impact, and compliance,
just to list a few.
These other expenses are required for several reasons: First, you generally
need to sync the information back to the existing on-premise enterprise
applications and therefore need to factor in the cost for the integration solution
to make that happen in an ongoing manner. That will run about $5,000
per month, per information system, with another $5,000 in human costs to
maintain it, as a rule of thumb. However, it is largely domain dependent, so
be sure to do your own integration solution cost analysis.
Second, you need look at the network impact. For the most part, unless
you are looking to move terabytes of data, this is pretty cheap. However, you
must consider it. It is a good idea to model the impact on the network and
model up through the transaction loads for years 1 through 5.
Finally, the costs of compliance, such as the ability to build in auditing
processes, including logging, and to support privacy regulations, such as
those created by the government, should be considered as well.
So, let’s add in $5,000 monthly for integration and $3,000 monthly for
compliance—not untypical. Again, you have to analyze these costs for your
own problem domain.
Over 5 years, the cash burn will look like this:
Year 1 $216,000
Year 2 $216,000
Year 3 $216,000
Year 4 $216,000
Year 5 $216,000
The total cost will be $ 1,080,000 over 5 years. Still better, but with the additional
and less visible costs built in, the gap has closed a bit (see Figure 4.2).
Of course, within some problem domains, both integration and compliance
may not be required, but other costs may be required; this is just an example.
Even with these costs considered, the cloud-delivered solution, generally
speaking, will be more cost effective for a problem domain with a small number
of cost variables. Of course, as we pointed out in the previous Book Blog,
IT cost models are typically much more complex and must consider issues that
are dependent on the special needs of the business; they are all a bit different.