IT Business Requirements and SWOT Analysis

1/18/22, 11:57 PM Building a Business Case for Cloud Computing

Learning Topic

Building a Business Case for Cloud Computing

Your business case needs to be brief and communicate the basics of cloud computing in a

manner that is easy for a layperson to understand. Analogies are a good way to convey

this information to nontechnical audiences, such as your executive leadership team.

Example:

Complex Concept Analogy

Cloud computing is billed based on actual usage on a

recurring basis, and does not

require an upfront investment

in computer hardware,

networks, staff, or facilities.

Cloud computing is similar to purchasing electricity from the utility company. When you

use electricity, you get a bill from the utility. The

utility customer doesn't have to invest in

purchasing or maintaining power generation

equipment, staff, or facilities.

Economies of Scale

One of the benefits of cloud computing is the ability to take advantage of economies of

scale. Cloud service providers provide a large-scale platform to a number of different

clients, which reduces the unit cost that each client pays.

In a traditional on-premise IT model, each organization has to invest in data center

facilities, telecommunications links, network infrastructure, servers, storage, staffing,

applications, and databases. Under a cloud computing model, an organization can simply

rent these items from an organization that invests in these items on a much larger scale.

Return on Investment (ROI)

1/18/22, 11:57 PM Building a Business Case for Cloud Computing

Calculating the return on investment (ROI) (the amount of return on an investment

relative to its cost) is critical for an organization's decision-making process. Organizations

are more likely to invest in an initiative if you can provide management with evidence that

the investment will pay off financially. For example, if you find that moving the

organization's infrastructure to the cloud will result in a 431 percent annual cost savings,

then you should highlight this savings in your presentation.

UMGC graphic

In this case, ROI would be calculated with:

gain from investment (GFI) = $10,073 - $1,596

cost of investment (COI) = $1,596

ROI = (gain from investment - cost of investment) / cost of investment

h6

1/18/22, 11:57 PM Building a Business Case for Cloud Computing

($8,477 - $1,596) / ($1,596) = 431%

ROI = 431%

On-Premise Model vs. Cloud Model for Data Storage

On-Premise Model Cloud Computing

Hardware/software hosted

on-premise by the

organization

Hardware/software is hosted off-premise by an

external organization (public cloud model).

Provisioning is based on

estimated peak demand,

which can lead to

insufficient resources during peak periods and a surplus

of resources during normal

periods

Provisioning is dynamic based on actual demand.

Internal IT staff support the

entire technology stack --

data centers, networks,

compute, storage, applications, and databases

Staffing requirements can vary, depending on the

type of cloud services acquired. If all infrastructure

needs are provided by the cloud provider, then an

organization could eliminate many IT positions such as network administrators, systems administrators,

and data center staff.

Capital expense budgets are

required, and it can take a

long time to add capacity or

refresh systems

Capital expense budgets are no longer required, and

additional capacity can be added quickly.

Departments may or may

not have financial

chargebacks for IT services

Billing is automated, and reports can be provided for

finance to charge individual departments.

Source: The Open Group. (n.d.). Building return on investment from cloud computing. Retrieved from http://www.opengroup.org/cloud/wp_cloud_roi/p2.htm

1/18/22, 11:57 PM Building a Business Case for Cloud Computing

IT Business Needs

You will need to assess the IT needs or requirements of the business to determine

whether cloud computing is a feasible option for the organization. To evaluate what the IT

business requirements are, you should look at the company's historical IT needs (current

IT infrastructure), future growth areas of the business (new business and expected growth

projections), and evaluating financial factors (ROI, TCO, IT budgets, service costs).

Cloud Reference Model

A cloud reference model or architecture helps you to better understand the different

parties that perform transactions, processes, or tasks in a cloud computing model, as well

as the interactions between these parties.

Source: National Institute of Standards and Technology. (2011). NIST cloud computing reference architecture. In the

public domain.

Cloud Architecture

Cloud architecture is a term referring to the various components required under a cloud

computing model. For example, in an infrastructure as a service (IaaS) delivery model,

these components might include compute and storage nodes and network connectivity,

and it is up to the cloud architect to determine how these components should interact

1/18/22, 11:57 PM Building a Business Case for Cloud Computing

with one another. In a software as a service (SaaS) delivery model, these components

might include front-end interfaces (web, mobile), middleware (business-specific

applications, application servers), back-end (databases), load balancing, and caching

services (Akamai, memcached, Amazon ElastiCache).

Cloud Migration Methods

Organizations moving to cloud computing models need to evaluate how to migrate their

existing IT workloads and data. Each organization has to evaluate whether it wishes to

hire a third party to help facilitate the migration, or perform the migration using its own IT

staff. Different migration methods may be used depending on whether it is an application,

database, or infrastructure services.

Current Trends in Cloud Computing

Cloud computing is fast-paced and rapidly evolving, so the current trends today will be

different than the trends tomorrow (Boulton, 2016).

Some organizations may shift away from private clouds, in favor of less expensive

public cloud implementations.

Cloud cost containment is very important, and new cost management tools are being

developed to aid in this.

Applications are being rewritten as native cloud applications.

Enterprise applications are moving to the public cloud.

References

Boulton, C. (2016, November 2). 6 trends that will shape cloud computing in 2017.

Retrieved from http://www.cio.com/article/3137946/cloud-computing/6-trends-

that-will-shape-cloud-computing-in-2017.html

Khasnabish, B. (2010). Cloud reference framework. Retrieved from

https://tools.ietf.org/html/draft-khasnabish-cloud-reference-framework-

00#page-6

Liu, F., Tong, J., Mao, J., Bohn, R., Messina, J., Badger, L., & Leaf, D. (2011). Special

publication 500-292: National Institute of Standards and Technology (NIST) cloud

computing reference architecture. Retrieved from

https://bigdatawg.nist.gov/_uploadfiles/M0008_v1_7256814129.pdf

1/18/22, 11:57 PM Building a Business Case for Cloud Computing

https://leocontent.umgc.edu/content/scor/uncurated/cca/2218-cca610/learning-topic-list/building-a-business-case-for-cloud-computing.html?ou=622270 6/6

A Service Brokering and Recommendation Mechanism for Better

Selecting Cloud Services

(https://leocontent.umgc.edu/content/scor/uncurated/cca/2218-

cca610/learning-resource-list/a-service-brokering-and-

recommendation-mechanism-for-better-sele.html?ou=622270)

Cloud vs. On-Premise Network

(https://leocontent.umgc.edu/content/scor/uncurated/cca/2218-

cca610/learning-resource-list/cloud-vs--on-premise-network.html?

ou=622270)

Definition of ROI - Return on Investment

(https://leocontent.umgc.edu/content/scor/uncurated/cca/2218-

cca610/learning-resource-list/definition-of-roi---return-on-

investment.html?ou=622270)

Economics of the Cloud: Employment Effects in Two Exemplary

Sectors in the USA, the UK, Germany and Italy

(https://leocontent.umgc.edu/content/scor/uncurated/cca/2218-

cca610/learning-resource-list/economics-of-the-cloud--

employment-effects-in-two-exemplary-sect.html?ou=622270)

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