BTCLogic ROI Investigation

8/3/2019 BTCLogic ROI Investigation

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CloudComputingROIAssessment

Presentation

July 29, 2010


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A enda

SettingupaCloudComputingROIAnalysis

FormulatingtheFinancialModel

PopulatingtheCostParameters

RunningWhatIfScenarios

DerivingPrincipalInsights

Cloud

Computing

Industry

Map

"Back

to

the

Future"

AboutBTCLogic

July29,2010 1BTCLogicConfidentialandProprietary


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ep

Firstsomebasics:"ValueAdd=IncrementalProfits"

.e.tomeasure ou omput ng s nanc a ene t,onenee stoaccount or

allareas

where

the

adopting

party's

profits

would

change

incrementally

as

a

resultofswitchingtoCloudComputing

, , . .timetomarketandcustomersatisfactioneffects

Thus toaccuratel modelCloudCom utin 'sfinancialbenefitsre uires"ROI

modeling"vs.simplerTCOmodeling:

ModelROIatthelocusofacloudadoptiondecision(vs.acorporateROI)

SeparateHardROISavingsfromSoftROISavings

HardROI

Savings

pertain

to

initial,

direct

cost

savings

only

(i.e.

"cash

in

or

out")

SoftROISavingsincludehardsavingsplusrevenue(e.g.timetomarket)effectsaswellasopportunitycosts



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Ca turin

AllCosts

AcredibleandaccurateROImodelofanyhostinginfrastructuresetupneedsto

startwithacompleteaccountingofalltypesofcosts,e.g.:

Hardware SoftwareLicenses

LaborCosts:Up Front,

Hardware

Software

Real Estate

Externalvs.Internal

Training

Startupvs.

Ongoing

Costs

Hosting

Solution

Hosting

Solution

IT Setup

Other Svcs

OpportunityCosts:

Security

BrandDamage

os sos s

Per UserLicenses

Training

On oin

LostRevenue

HiddenCosts

Etc.

Per CPUSupport

Maintenance

VariableCosts


Over TimeIT Support


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Sam leROI

Tree

Include Revenue effects,e.g. time to market and

customer satisfaction

TYPICAL ROI TREE:COMMON USESERVICE Supporting Reasoning

Sooner Faster time to market

e ects

ore ew us ness as er grow Higher customer satisfaction resulting in better word of mouth

Direct Higher peak Ability to cross-sell, better attach

More Repeat Business Higher renewal rates due to higher satisfaction ratingsRevenueSavings Own channel Easier tele sales due to easier close

IndirectPartner channels Easier cross sell through federated identity

Free up resources to work on projects generating revenue

Hardware Up front & Ongoing

Opportunity Savings

Software Up front & Ongoing

Direct Labor - Internal Up front & Ongoing

Labor - External Up front & OngoingCostSavin s Im lementation Trainin Onboardin

Separate Hard ROISavings from

Soft ROI Savings

IT Cost Up front & Ongoing

"Corporate Taxes" OngoingIndirect

Scheduled

Model ROIat the locus


Unscheduled Responsiveness

Opportunity Costs Reliability / Downtime Responsiveness

decision


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PopulatingtheCostParameters

ep

Thefirststepistocapturethesystemarchitectureandassociatedcost

parametersofaparticularCloudComputing setup,andcompareitto

CostCategory #ofInstancesCost

/

Instance

Hour Units

Load

Factor

CostPer

Month

CostPer

Year

ComputeCost/Month

Windows 100 $0.13 $/Instance/Hr 36% $3,321

Windows+SQLServer 50 $1.10 $/Instance/Hr 36% $14,614

Linux

150 $0.10 $/Instance/Hr 36% $3,986Windows(SQL/xlarge) 2 $2.40 $/Instance/Hr 36% $1,275

StorageCost/Month

5.6T(usable) 5.6 $0.10 $/Gb/month 100% $417

I/O 30B $0.10 $/1MMI/Os 100% $300

I/O

20 $0.10 $/Gb/month

36% $1

TotalEC2Cost/Month $23,914TotalEC2CostforYear1 $286,971

July29,2010 5BTCLogicConfidentialandProprietarySource: http://www.uptimesoftware.com/uptimeblog/2009/01/cost-of-cloud-computing-expensive


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Po ulatin

theCost

Parameters

cont'd

Makesituationspecificcostcomparisons


Source: http://www.uptimesoftware.com/uptimeblog/2009/01/cost-of-cloud-computing-expensive


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Po ulatin

theCost

Parameters

cont'd

...anonpremisesetupthathassimilarperformanceandcapabilities

CostCategory Number UnitCost InitialCost Month YearHardwareCosts:

Dell1950 28 $1,900 $53,200

Dell2950 2 $4,000 $8,000

HPDL585 2 $9,500 $19,000

10TBiSCSI 1 $2,900 $2,900

SoftwareCost:

SQL

Server

2008

$2,083 Oracle10g/11g $2,083

MonthlyCosts:

Dell/HP/EquallogicSupport $300

NetworkInfrastructure $556

HVAC/Power $1,000

FloorSpace 500sq/ft $24sq/ft/year $1,000

,

Annual

Support

(VMware)

$1,250

Internet $1,200

LabourCost/Month 50% $10,000 $5,000

TotalOnPremCost/Month $15 722


TotalOnPremCostforYear1 $271,764



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Po ulatin

theCost

Parameters

cont'd

Makesituationspecificcostcomparisons




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ConsiderMiti atin

Circumstances

MostCloudComputingcostanalysesaresimpleTCOcomparisons(e.g.seecited

blogexample)thatfailtoconsiderothervitalparametersandcostdrivers,e.g.

SLAs,securityan regu atoryrequirements,imp ementationcosts,etc.

Typical Hidden Costs To Be Considered

40%

50%

60%

dents

0%

10%

20%

30%

%Respo

9July29,2010 BTCLogicConfidentialandProprietarySource: Adapted from Sample On-Premise vs. On-Demand IM Solution Cost Comparison and Customer Research


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Factorin

inTime

to

Market

Timetomarketaccelerationandtheabilitytoscalewithrelativeeaseare

typicallykeyadvantagesofPaaSandIaaSsetups,andthosetwofactorsshould

ROI Patterns by TTM Savings and User Base

8.0

4.0

6.0

No.ofUsers(M)

TTM Savings

-2.0

0.0

.

vings(Months); Targeted No. of Users

Hard ROI

Soft ROI

-6.0

-4.0

Hard and Soft ROI Soft ROI Only No ROI

TTMS

a

July29,2010 BTCLogicConfidentialandProprietary 10

ROI Patterns by Hard and Soft ROI Savings

Source: Adapted from Sample IaaS and PaaS ROI Analysis for Major Software Application


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Results Im act

of

Time

To

Market

Typically,themoreCloudComputing setupscanacceleratealaunchingparty's

timetomarket,thebetterwillbeitsROIcomparedtoonpremisesolutions

Thetradeoffbetweentimetomarket(advantageCC)andvolumeeffects(see

nextpage;

disadvantage

CC)

points

to

ways

to

segment

demand

for

CC

CCCostSavingsasFctofTimetoMarket

$3.00

$4.00

$5.00

s($M

)

$1.00

$0.00

$1.00

.

CCCostSavin

1YearCostSavings

3YearCostSavings

$3.00$2.00

5.0 2.5 0.0 2.5 5.0


Source: Sample Analysis of Previously Cited Cloud Computing Comparison


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Results Im act

of

Variable

vs.

Fixed

Pricin

Analogously,usingourearlierexample,wecancompareondemandsetups'

variable(i.e.volumedependent)pricingtoonpremise pricingtoquantifya

ou omput ng ssetup rea evencostasa unct ono usagevo ume

Abovesome

volume,

Cloud

Computing setups

will

cost

more

than

dedicated,

costoptimized,onpremise hostingsetupsduetoCC'svariablepricing

$0.10

$0.20

$0.30

)

CCCostSavingsasFctofVolume

$0.30

$0.20

$0.10

$0.00

ostSavings($

1YearCostSavings

$0.60

$0.50

0.40

50% 75% 100% 125% 150%

CC


UsageVolumeas%ofBaseLoad

Source: Sample Analysis of Previously Cited Cloud Computing Comparison


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Results Grou

Product

S ecific

Savin s

Lastbutnotleast,comparinghardandsoftROIsavingsduetoCCamongproduct

familiestypicallyshowstrendswheretherearecleargainersandlosers

ROI - Hard and Soft SavingsHard Savings Only Hard and Soft Savings

Groups with soft ROI

any ROIsavings

Product 4

Product 3

Product 2

Groups with

sav ngs on y

Product 9

Product 8

Product 7

Product 6

ROI savings

-2X -X 0 X 2X 3X

Product 12

Product 11

Product 10


ROI - Savings

Source: Adapted from Sample IaaS and PaaS ROI Analysis for Major Software Application


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ep

IfCloudComputingsetupsROIsaremostlyduetoenablingtimetomarket

accelerationwithdetrimentalvolumeeffects,severalconclusionscanbedrawn:

1. Easeofonboardingandotherprocess andtechnologyenabledtimeto

marketacceleratorsneedtoreceiveimplementationtimeandattention

Priorsurveysandanalyseshaveshownthistobeakeydriverforcentralplatformsvalueadd

2. CCsnegative

ROI

correlation

with

the

size

of

the

user

base

/usage

volume

suggestsCCismostappropriate orstartupornew aunc initiatives,an or

scenarioswhereahostingsetupisnotcoretoanorganizationsmission

Wellpublicizedissuesaroundsecurity,privacyandreliabilityofCloudComputingbasedhostingsetupsfurtheraddtothechallengesforcurrentCChostingofferings

tosatisfy

the

needs

of

fully

scaled

applications



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Derivin

Princi alInsi hts

cont'd

3. Clientspecificconclusionsshouldbebasedonsituationallyrelevantanalyses

ofparticularondemandandonpremisehostingalternativesbeing

consideredto

address

the

needs

of

aparticular

client

around:

Whatistherelativeweightingoftimetomarketvs.lostcostscalingneeds?

WhatareSLAandregulatoryrequirements?

Whataretheneedsarounddevelopmentandprovisioning?

WhataretheMISskillavailability/requirements?

DittoforITResourceAvailability?

4. MakevendorrecommendationsofIaaS,PaaSandCloudComputingvendors

thatmeetaparticularclient'sneeds(drawnfromfollowingindustrymap)



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A enda



Populatingthe

Cost

Parameters



CloudComputingIndustryMap "BacktotheFuture"

AboutBTCLogic



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CloudComputingBasics

Cloud computing is Internet (Cloud) based development and use of computertechnology, whereby dynamically scalable and often virtualized resources areprov e as a serv ce over t e nternet

Evolving IT and User Needs.

IT Professionals: End Users:

SECURITY&COMPLIANCE

Stolenlaptops&dataloss

Stringentregulation

INCREASEDMOBILITY

Anywhereaccess

Deviceindependence

ProtectionofITenvironment

COST

Stolenlaptops&dataloss

Strin entre ulation

RoamacrossPCs

CONSUMERIZATION

Moreworkspacefreedom

Flexibleconfi urations

ProtectionofITenvironment


Accessthroughowndevices


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Platformruntime

Ex:AIR,Flex,Flash;Google

Ex:hotpads.com,

amap

base

real

estate

search

firm;GoogleApps;SalesForce.comCRM

rome; croso veMesh,Silverlight;

Webbrowser;

ChromeOS;Android

Ex:AmazonWS;WindowsAzure

SalesForceForce.com

Ex:Amazon

EC2,

S3;

Enomaly;

Developer

Ex:XenServer,VMwarevSphere,MicrosoftHyperV

Administrator



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WhatisCloudComputing?

Developer

Ex:Ex:SalesForceApex,SalesBuilder,

MicrosoftBPOS,/MSOnline,

NASDAQ

Dashboard,

Buzzword,Acrobat.com,Photoshop.com

: ; ,AppBuilder;MicrosoftSilverlight

Ex:

InstallFree,

Microsoft

LiveMesh,

MEDV,Wanova,RingCube,Unidesk

AdministratorEx:GoogleAndroid,ChromeOS;Mobilin;LinuxKVM,vEOS



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WhereCanCloudsLive?

PRIVATE CLOUDPRIVATE CLOUD HYBRID CLOUD

-PUBLIC CLOUD

On premise

PoolofcomputingresourcesinaselfmanagedDC

Poolofcomputingresourcesofferedthroughahost

Poolofcomputingresourcesofferedfromsamevendor

at a hosted site-

Emu atespu icc ou Insideyourown

firewall(security)

Nosharing

Uti izes ownso twareorsoftwarefromanother

vendor

Publiclyaccessible

VMware

IBM

Google

Microsoft Cisco

Terremark Expedient

Microsoft GoGrid Rackspace



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Some

CC

Im lementation

Success

StoriesiLike Socialnetwork,musicrecommendationapp Grewto55Musers AmazonS3use or own oa s,useran artistp otosan vi eos

Apttus Contractproposalmanagementservice BuildandrunonForce.com

GSAApps.gov Cloudcomputingstorefront

NYTimes

"Times

Machine" .

AmazonWebServicesandHadoop

BumperSticker FacebookappmadebyLinkedIn Grewto5.6Mactiveusers , , ,

MedCommons Healthrecordssharing Amazon'sAWSandbillingsystem


Source: Sun Microsystems Webinar Cloud Computing An Introduction on October 7, 2009


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A enda



Populatingthe

Cost

Parameters



CloudComputingIndustryMap "BacktotheFuture"

AboutBTCLogic



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About

BTC

Lo ic

OurProfile

BTCLogicisamultidisciplinaryteamofBusiness,TechnologyandCreativeprofessionalswithover

150years

of

combined

experience

working

in

technology,

security,

finance

and

consumer

markets

Offeringsolutionservicescombiningbusiness,technologyandcreativedesignconsultingto

conceive,design,andbringdigitalproductstomarket andlaunchdemandgeneration

Wepartnerwithclientsfromthestrategicplanningphasethroughtacticalexecution

Ourserviceofferingrangesfromrigorousanalysestocreativedesigns,technicalarchitecturesand

implementations,andontodemandgenerationprogramsthatdrivegrowth

OurFocus

Theonlyteamwithanintegratedapproachtoboth,technologydrivenandcustomerdriven

innovationswiththeknowledge,insights,andactionplanstoharnessthemtodrivegrowth

Ourwork

is

always

user

centered

and

by

focusing

on

the

needs

and

preferences

of

the

user,

we

work

withourclientstomakeproductsandservicescompellinginanagewhenbrandloyaltyshiftseasily



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TeamExperience

ur

eam sexper ence

covers

wor

n

nance,

en erpr se

app ca ons,

wireless,networking,professionalservices,andothersectors

Corporate

Venture-Funded

Other

Adobe

AOL Time Warner Intel

Intuit*

ArcSight

Aragen Bio BioSpace

Brightmail

Friend Skoler LLC

NCCU NesheimGroup

Netliant

McKinsey & Company*

Microsoft

Mitsui

NetIQ*

Intalio

Ketera

Kyriba

Postini

Nereid

Podloco

Tavve

Stanford GSB

Nihon Unisys

Palm Computing

PeopleSoft

Symantec

Resilience

Saba Software

SEVEN

SVAMA

-

Toshiba Trend Micro

VA Software

VTEL/Onscreen24

VPEP Technology Wireless Services

July29,2010

Wells Fargo*

Wipro

26BTCLogicConfidential * Team Member Employer


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Ri orous

Cross

Functional

Launch

Process

Tasks

12.Project&Process1.MarketResearch 7.Product/service 9.BizDev3.Cust.Research

StrategicVision ValidateMarket

Services

Demandmp emen

Management

Leadership

QA&Testing

UserTesting

VendorSelect.

Segmentation

TargetCusts.

IndustryMap

2.CompetitorRsch.

PubDomain

Definition

MRD,PRD

Fct.Spec.

DesignSpec.

Nav.Hierarchy

Targetmapping

10.Sales

Effectiveness

Efficiency

ValueSelling

PubDomain

Interviews

4.FinancialModel

5.

Value

Proposition

Interviews 8.ProductDesign

Branding

Layout(s)

Templates

Architecture

11.Marketing

LeadCultivation

Messaging

Design

Mktg.Programs

.

Mockups

Clickthroughs

CustomerResearch

DomainResearch

CompetitorAnalysis

ProductStrategy&Definition

UIDesign&Development

SalesMgmt.&Biz.Dev.

Project&

InterimMgmt

Leadership

ProductMgmt.&Marketing

Positioning&Messaging

Branding&IdentitySystem

Skills

CompetDifferentiation

&ValuePropositioning

SalesCollateral.&Training

MarketingPrograms

Prototyping&

Testing

WebDesign&Content

S/WArchitecture&Coding



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www.btclogic.com

July29,

2010 BTC

Logic

Confidential

and

Proprietary 28

Documents

BTCLogic ROI Investigation