Cloud Computing Value Survey
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Cloud Computing Cost/Benefit Ratio
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This analysis is only a representative example of the business case for cloud computing. The
results should not be used for actual budget planning. The model used is derived from summary
results of a Booz Allen Hamilton life-cycle cost (LCC) estimate of public, private, and hybrid clouds.
That analysis assumes a 3-year transition period from a status quo (SQ) described as a
1000-server, unvirtualized datacenter. For each scenario, investment costs are incurred from FY10
to FY12 and includes (depending on the scenario) hardware procurement and commercial
off-the-shelf (COTS) software license fees; contractor labor required for installation, configuration,
and testing; and technical and planning support (i.e., system engineering and program
management costs) before and during the cloud migration.
The LCC also assumes recurring O&S costs "ramp up" for all cloud scenarios beginning in FY10
and enter steady state in FY13, continuing through FY22. For private clouds, these costs include
hardware and software maintenance,periodic replacement/license renewal costs, system
operations labor support costs, and IT power and cooling costs. For hybrid clouds, the O&S costs
include the same items as the private cloud (albeit on a reduced scale), as well as the unit
consumption costs of IT services procured from the public cloud. For public cloud scenarios, the
O&S costs are the unit costs of services procured from the cloud provider and a small amount
of IT support labor for the cloud provider to communicate any service changes or problems. In all
three cloud scenarios, a significant portion of the O&S costs are incurred while phasing out the SQ
environment during the transition. The SQ phase-out costs "ramp down" from FY10 to FY12,
dove-tailing with the ramp up of the new clouds' O&S costs.
Published details are available at:
http://www.boozallen.com/media/file/Economics-of-Cloud-Computing.pdf
results should not be used for actual budget planning. The model used is derived from summary
results of a Booz Allen Hamilton life-cycle cost (LCC) estimate of public, private, and hybrid clouds.
That analysis assumes a 3-year transition period from a status quo (SQ) described as a
1000-server, unvirtualized datacenter. For each scenario, investment costs are incurred from FY10
to FY12 and includes (depending on the scenario) hardware procurement and commercial
off-the-shelf (COTS) software license fees; contractor labor required for installation, configuration,
and testing; and technical and planning support (i.e., system engineering and program
management costs) before and during the cloud migration.
The LCC also assumes recurring O&S costs "ramp up" for all cloud scenarios beginning in FY10
and enter steady state in FY13, continuing through FY22. For private clouds, these costs include
hardware and software maintenance,periodic replacement/license renewal costs, system
operations labor support costs, and IT power and cooling costs. For hybrid clouds, the O&S costs
include the same items as the private cloud (albeit on a reduced scale), as well as the unit
consumption costs of IT services procured from the public cloud. For public cloud scenarios, the
O&S costs are the unit costs of services procured from the cloud provider and a small amount
of IT support labor for the cloud provider to communicate any service changes or problems. In all
three cloud scenarios, a significant portion of the O&S costs are incurred while phasing out the SQ
environment during the transition. The SQ phase-out costs "ramp down" from FY10 to FY12,
dove-tailing with the ramp up of the new clouds' O&S costs.
Published details are available at:
http://www.boozallen.com/media/file/Economics-of-Cloud-Computing.pdf
