In this blog, we begin a series of posts about companies, both large and small, that are considering implementing cloud initiatives to solve their technical or financial bottlenecks. In each case, we will give a description of the company, analyze its business environment and existing issues, and discuss the solutions found.
We will start with a medium-sized company (215 employees and annual revenue of over US$2.52 million), a local dealer selling new and used automotive parts. The company has experienced an increase in traffic of 20% in the course of four months by virtue of a successfully performed marketing campaign. In addition, the number of new items in the catalogues has been growing on average by 2.5%. All the data, including goods descriptions, customer information, and backups were stored in-house.
Since the popularity of its e-commerce Web site has been growing at a high rate, the company’s hardware resources became unable to keep up with the bandwidth and storage demands. To make a strategic decision about whether to enlarge the existing on-premises resources or to implement a cloud infrastructure, the customer turned to Akelios. The company also wanted to know how beneficial it might prove to be in the course of the next year.
Together with the company, we have worked out the following goals:
- Calculate possible cloud migration and maintenance expenditures.
- Compare a cloud implementation scenario with the possibility of enlarging on-premises resources.
- Estimate the possible return on investment (ROI) in both cases.
- Analyze possible expenditures related to providing the necessary level of security (including accounting and warehousing data).
Being new to the cloud environment, the company needed a comprehensive cost-benefit analysis of a cloud implementation scenario. Our responsibility was to analyze their business and technology environment, identify key issues that limited the company’s growth, and assess the cloud migration costs and ROI. As a result, we worked out a document with a description of the existing infrastructure, development plans, the feasibility of current plans and changes that might be required, possible design and technical alternatives.
In addition, our report contained information on the relative costs and benefits of maintaining existing components, developing new systems, or replacing technologies. This information was based on the analysis of three areas. First, our team examined the company’s business requirements and expectations, in order to determine how these requirements could best be implemented into the system’s design. Second, we analyzed the existing systems, including an appraisal of the source data quality, data extraction processes, data warehouse design and architecture, as well as end-user access tools and applications. Finally, the project development methodology and approach, including the organizational and management aspects, were also addressed.
It took us two weeks (ten working days) to conduct the assessment and to generate the calculations of general and administration costs. This included IT infrastructure costs (purchasing server space, providing admin staff training, server support and administration, customization and integration), as well as estimated taxes and social benefits.
The main criteria covered during the assessment period were the following:
- Requirements review (1 day)
During the first stage of the assessment, we conducted a review of business goals, perceived limitations, and analysis and information delivery requirements.
- Information management and delivery assessment (2 days)
It was necessary to evaluate current data models, underlying products and business, as well as data collection practices and technology.
- Technology assessment (2 days)
To get an understanding of whether the existing technology infrastructure will be able to satisfy new business requirements, we assessed hardware and database platform, software, data integration, and analytics tools.
- Cloud computing vs. on-premises resources (2 days)
The team also evaluated the initial investment and annual recurring cost in the case of cloud computing implementation, compared it with the previous investment in on-premises resources, and measured the possible return-on-investment (ROI) during the period of six months.
- Organizational and operational assessment (1 day)
Another point for consideration concerned organization and operational environment assessment. In the report, we outlined the roles and responsibilities, the structure of the organization, and indicated the recommended changes to the organizational structure that would be preferable in terms of the existing requirements.
- Document findings and report delivery (2 days)
The final stage of the assessment was to determine whether current plans fit the stated need, to identify gaps between the current state and the desired one, and to recommend adjustments to the business plan that may be needed before the start of the cloud implementation process, including the recommendations for the next possible steps.
As a result, we worked out a financial case for hybrid cloud deployment, since some of the customer data (credit card information, accounting data, e-mails, etc.) must have been preserved in-house. According to the calculations, the completion of the project would require approximately 200-400 hours, saving approximately $500,000 annually. Also, the investment into cloud deployment would pay off during the following six months.
In my next post, I will touch upon the actions taken by the company after receiving the report, and how these decisions helped the company cut implementation and support costs by 30%.