Cloud-based Infrastructure as a Service save up to 55 percent of IT operations spend

(07/09/2010)

SunGard Availability Services has demonstrated how a mid-sized organisation moving its existing production IT environment to SunGard’s Infrastructure-as-a-Service (IaaS) model can, on average, reduce its total IT running costs by between 35% – 55%. The calculations have been based on real-life numbers across entire business budgets and SunGard’s experience of working with 10,000 customers.

With CIOs and IT departments under continuing pressure to reduce costs and increase efficiency, whilst continuing to grow, SunGard investigated the relative cost of ownership (RCO) of adopting its private, secure cloud-based computing Infrastructure as a Service solution. The investigation took into consideration not only the basic in-house data centre and infrastructure maintenance costs, but also includes ‘invisible’ ancillary charges that are often overlooked by CIOs when considering the expense of moving to the cloud.

These ancillary charges do not usually appear on CIOs’ own budgets, but are borne elsewhere by the business and include the cost of hiring staff to run data centres around the clock (salary and benefits); the financing needed to build the in-house data centre and the costs of power, security and rates.

“Infrastructure within the cloud will play a significant role in the future of IT,” said Keith Tilley, managing director UK and executive vice president Europe for SunGard Availability Services. “It not only presents an opportunity for companies to move away from complex and outdated legacy equipment, which soaks up a large proportion of the IT budget, but also offers increased flexibility in terms of scalability and IT agility, making for a very cost-effective solution.”

In-house data centres are often planned to include additional server capacity to cope with business growth and fluctuating storage needs. This means IT assets can be under-utilised, operating at as little as 25% of capacity for the majority of the time. Even when under-utilised space isn’t being used it incurs unnecessary expense through real estate and power costs.

With SunGard’s IaaS model, IT is delivered by specialists as a service with predictable costs from bottom to top, while the timing of necessary scaling in IT hardware or software, can be adjusted rapidly, to suit business requirements.

“The modular nature of the cloud enables businesses to buy exactly what they need today rather than speculate on a costly IT solution that they hope the business will grow into at some point in the future,” said Tony Lock, an analyst at Freeform Dynamics. “And, although many enterprises have been reluctant to adopt the cloud model due to concerns about the security and availability of their data, this fear is no longer valid given the different types of cloud solution currently available and the levels of security and resilience offered by some vendors.”

SunGard has considered various key factors that businesses must take into account when running their own data centre.
The cost of financing the in-house centre at a rate of 8% per annum over a 3 to 5 year period.
Server virtualisation ratio of 20 physical to 1 virtual server frame.
Virtualisation increasing server utilisation to 75% (below the 90% industry expectation)
Growth in IT consumption of 5% per annum.
Typical employee costs are an additional 30% on top of salary including benefits, desk, laptop/desktop and ancillary charges such as office space, heating, lighting, etc.
Power costs are based on SunGard’s own rates for electricity.
Other costs are rent and rates, along with the associated office space needed to support a data centre. Whether a company provides its own team of mechanical and electrical engineers to keep the data centre running or outsources this function, there is an associated cost.

Related topics:  Network Security 

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