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How Much is the Sky?
Evaluating the Monetar y Aspects of Moving to the Cloud
Expected savings from lower up-front capital costs, more predictable operational costs, and economies of scale are driving the
inexorable march to cloud adoption by organizations of all types.
But these vaunted cost savings aren’t a slam dunk.
Today’s cloud market is still the Wild West, with
vendors slapping the cloud moniker on all manner of
services. If you don’t carefully define what services
you need and assess exactly what the vendor offers,
you can easily wind up with a partial solution. Filling
the gap between the cloud services you bought
and the ones you need will then demand additional
expenditures—and a complete solution may end up
costing far more than expected.
is 23 percent.4 With savings like these, it’s not
surprising that organizations are steadily marching
toward cloud adoption.
This paper helps clarify the financial benefits of a
cloud solution, the most common types of cloud
services available, and which services you’ll need to
implement your PTC® solution in the cloud.
Cloud Services Reduce Costs
Cloud adoption is rapidly becoming a reality. In a
recent survey of 1,242 IT professionals, CDW found
that 38 percent are implementing or maintaining a
cloud solution.1 Most of these users (88%) are doing so
to cut costs.2
These savings are proving substantial. Nucleus
Research examined 70 case studies 3 of companies
adopting cloud-based software as a service (SaaS)
applications and found that they delivered 1.7 times
greater ROI than on premise applications, and a study
by Rackspace® found that the average cost reduction
Sources of savings
Cost savings come from several sources: lower
up-front capital costs, more predictable operational
costs, and economies of scale that are passed along to
the customer.
Lower capital costs
With cloud computing, you no longer need to purchase
infrastructure or data center space up front to run
your applications. You pay only for the services you
need, when you need them.
http://www.cdwnewsroom.com/wp-content/uploads/2013/02/CDW_2013_State_of_The_Cloud_Report_021113_FINAL.pdf
1
2
http://www.cio.com/article/2387672/service-oriented-architecture/how-cloud-computing-helps-cut-costs--boost-profits.html
http://www.enterprisecioforum.com/en/blogs/rickblaisdell/roi-cloud-migration
4
http://www.forbes.com/sites/joemckendrick/2013/02/20/cloud-computing-boosts-next-generation-of-startups-survey-shows/
3
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Predictable operational costs
You’ll pay a pre-defined cost, which might be a monthly
subscription or a usage-based charge. Staff to
implement, administer, and maintain the entire system
(e.g., the datacenter, servers, the operating system,
the database, the network, and the application) is
included in the price.
Economies of scale
Cloud vendors share infrastructure and labor costs
among large numbers of customers. This means
the vendor can optimize the hardware and the staff
necessary to operate and manage the datacenter,
infrastructure, and applications to reduce costs. Many
cloud providers pass savings along to their customers
that include:
• Lower power costs: When you run your own data
center, servers aren’t fully utilized. Idle servers
waste energy. Better hardware utilization improves
the efficiency of power use.
• Resilience without redundancy: When you
purchase your own servers, you need to buy extra
hardware to support testing and staging activities
as well as ensure against hardware failure. This
spare hardware is expensive. Cloud computing
allows you to scale up as needed to eliminate
expense associated with idling hardware.
• Lower staffing costs: If you use specialized
software—for example PTC solutions—you need an
IT expert who’s fully up-to-speed on its operation,
as well as a backup person to take over at night or
when the primary administrator is out of the office.
Yet administering the specialized software is not
necessarily a full time job. With a cloud-based
PTC service, the provider spreads the available
expertise over multiple clients. These technicians
work with the software full time to keep their skills
fresh. You gain full coverage at a lower cost.
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An Abundance of Options
Although most cloud services deliver cost savings,
not all cloud services are created equal. There are a
plethora of cloud service variations, including:
• Infrastructure as a Service (IaaS): Furnishes
servers and/or storage resources and network
resources along with staff to implement and
administer these systems.
• Platform as a Service (PaaS): Delivers a platform
(e.g., programming languages and tools) that
customers use to develop applications that will then
be delivered to end users via the cloud.
• Software as a Service (SaaS): Offers application
functionality to customers via a web browser.
SaaS includes all the back-end services needed to
operate the application in the cloud.
These types of services can be delivered using various
flavors of cloud:
• Public cloud: A hosted service available over the
Internet. Multiple customers share the service
provider’s infrastructure. While this is the least
costly option, some customers are concerned about
security in the public cloud.
• Private cloud: Cloud service is implemented within
the corporate firewall that’s controlled by the IT
department. This model is more expensive, but can
alleviate security concerns when security is limited
to a local area network (LAN).
• Hybrid cloud: Uses both private and public clouds
to perform distinct functions within the same
organization.
• Virtual private cloud: An on-demand, configurable
pool of shared computing resources that are
allocated within a public cloud environment. This
flavor of cloud provides some isolation between
different organizations sharing the resources to
improve security.
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Compare Apples to Apples
Given all the options available, it’s critical to
understand what you need and what the service
provider delivers before you contract for cloud
services. Without this understanding it’s easy to be
misled by a low price, only to find that that the service
you purchased doesn’t provide what you really need,
causing you to purchase costly additional services.
Consider the differences between an IaaS and a SaaS
offering.
What IaaS includes
An IaaS service typically provides low-level server,
storage, and networking infrastructure. The service
provider typically charges using a consumption or
use-based model. You pay only for the services you
use and can scale your usage up or down as needed.
A typical IaaS service will include:
• Server hardware and maintenance
• Network hardware and maintenance
• Power for servers
• Power for HVAC/Utilities
• Facilities (UPS, Rack, Maintenance)
• Storage
• System and data backup and off-siting
These services assume that you will properly size
servers for the necessary computer power, architect
for redundancy to ensure availability, and develop a
disaster recovery strategy. You are also responsible
for the performance of the application running on the
servers.
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SaaS is more comprehensive
In contrast, a SaaS model delivers comprehensive
services. SaaS delivery includes all the infrastructure
services delivered by the IaaS model, but the service
provider also sizes servers and is accountable for
availability as well as a disaster recovery strategy
and architecture.
Service providers typically charge a monthly
subscription with the actual cost determined by some
measure of value and usage. For example, many SaaS
providers will offer tiered services, where you pay
one monthly amount for X level of service, a different
amount for Y level of service,or a third amount for Z
level of service.
SaaS offerings typically include:
Infrastructure
• Server hardware and maintenance
• Network hardware
• Hardware and network maintenance
• Power for servers
• Power for HVAC/Utilities
• Facilities (including UPS, rack, maintenance)
• Storage
• System and data backup and off-siting
Licenses
• Operating system license
• Database license
• Software license
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Application support
• Application administration
• After-hours support
Infrastructure Support
So instead of paying one organization to do everything,
the company ended up paying three organizations
to set up the system for them. Finally, the company
decided to use PTC to run their entire solution for
them on a SaaS basis.
Upgrade support
The moral of the story is that you need to understand
exactly what the cloud service provider delivers.
Because the company didn’t take this step, it spent
considerable time, effort, and money to hobble
together the complete solution it really needed.
• Labor to perform system upgrades
Technical Considerations
• DBA administration
• SA administration
• Training to maintain competency of administrators
When Cloud Service Selection Goes Wrong: A
Real-World Example
As you can see, IaaS offerings are quite different than
SaaS ones, but because the complex array of choices
can be quite confusing, it’s easy to inadvertently select
the wrong option. If you do, costs can escalate quickly.
For example, a global company approached PTC about
purchasing software, but didn’t want to manage it
internally. They wanted SaaS, but chose an IaaS as
their cloud provider due to the low costs.
The company initially thought the IaaS provider would
set everything up for them. However, the IaaS provider
simply gave the company a link to their portal so it
could configure the servers themselves. The company
had to contract with a third party to configure and
administer their servers, and set up the network and
disk space.
Unfortunately, this third party had no experience
as a database administrator or with PTC software.
Nor did the consultant know how to ensure that the
environment was resilient in case a server went down.
So the company ended up hiring a third company to
set up the database, run the PTC software, and ensure
application and infrastructure resiliency.
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In addition to delivering the right services, the
cloud service you select needs to meet your
technical requirements. For SaaS customers, this
includes security, access control, performance, and
capabilities.
Security
Be sure your data centers and data are secure.
Data centers should comply with standards that
include ITIL, SSAE-16 reporting, and International
Organization for Standardization (ISO) 27001: 2013
standards. The solution should also deliver proactive
disaster recovery, apply security patches as needed,
and perform nightly backups.
Access control
End users need to access the service consistently
and in a secure manner. The service should offer a
99.5 percent available SLA. Data should be encrypted
travelling to and from the cloud using HTTPS.
Performance
The service provider should be accountable for sizing
your server resources based on your use case to
ensure good performance without over provisioning,
which can drive up costs. They should also anticipate
growth by monitoring the system and proactively
tuning it.
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Capabilities
The service provider should be able to fully host
your software. It should evaluate integrations and
customizations for security risks. And it should be
able to upgrade the software and accommodate your
customizations as necessary.
Conclusion
Cloud services have become widely accepted for their
ability to reduce costs, but these savings can only be
fully realized if the chosen vendor provides the full
range of services and technical capabilities that you
require. Before making the move to cloud services,
carefully evaluate the provider to be sure you find the
right match.
your application’s operations and environment.
They ensure consistent application availability with
proactive monitoring, performance tuning, and speedy
issue resolution with immediate access to PTC R&D
and technical support.
Speak to a PTC Cloud Services expert today to discuss
your requirements and successfully move your PTC
solution to the cloud.
© 2015, PTC Inc. All rights reserved. Information described herein is furnished
for informational use only, is subject to change without notice, and should not
be taken as a guarantee, commitment, condition or offer by PTC. PTC, the PTC
logo, Product & Service Advantage, Creo, Elements/Direct, Windchill, Mathcad,
Arbortext, PTC Integrity, Servigistics, ThingWorx, ProductCloud and all other
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