Cloud computing is currently a hot topic for many in the technology industry, but the question facing any business utilizing IT services is whether this cloud phenomenon supports their requirement to meet the top-line business charter and objectives while impacting bottom-line costs.

October 21, 2010

2 Min Read
Measuring the Business Value of Cloud-based IT Services

By Kunjal Trivedi 1

Cloud Business Value

Cloud computing is currently a hot topic for many in the technology industry, but the question facing any business utilizing IT services is whether this cloud phenomenon supports their requirement to meet the top-line business charter and objectives while impacting bottom-line costs.

To better understand the situation, let’s start with an example of the cost structure behind today’s IT production server cost structures. Server costs arise from the typical configuration where each production IT server fronts a Development and Testing (DevTest), Quality Assurance (QA), and Pre-Production/Disaster Recovery (DR) server(s). Data center facility costs then stem from the need to house all these production and non-production server resources. And finally, there are scaling costs, which result from a typical data center today having to be built with the capacity to cater to the peak utilization of IT services. Consequently, by the architecture’s very nature, substantial resources will remain idle when IT services are running at an average load.

The cost vs. value dilemma? Well, for every IT budget dollar spent for DevTest, QA and DR resources, IT budget is taken away from potential new IT services designed to make the business more agile and competitive. As a result, an IT department is missing its opportunity to significantly impact the business’s top-line and bottom-line initiatives.

Reality Check

Now where do cloud-based IT services enter the picture? If you consider their ability to provide scalable, on-demand, readily available, and cost-efficient DevTest, QA and secure DR functionality, cloud-based IT services can enable an IT department to increase the “bang for the buck” it receives from its budget, while simultaneously addressing any perceived inhibitors of cloud computing adoption, such as security and availability.

The recommendation to a business is to evaluate cloud-based IT services for DevTest, QA, and DR resources that allow for measurable IT budget savings to be realized. For cloud service providers, recommendations include providing (1) a sandbox environment where a business customer’s IT department can familiarize itself with how to effectively use cloud-based IT services and (2) a migration path from the business customer’s proprietary data center or co-location facility to the provider’s cloud-based IT services environment.

Check out this blog for a variety of topics relating to cloud computing paradigm.

Kunjal Trivedi is product manager, Service Provider Marketing, Managed Business Solutions at Cisco Systems Inc. Monthly guest blogs such as this one are part of The VAR Guy’s annual sponsorship.

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