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The Economic Benefit of Cloud Computing

Transformation Infrastructure

By pwsadmin | September 26, 2020

Hybrid IT enables a composable infrastructure which describes a framework whose physical compute, storage, and network fabric resources are treated as services. Resources are logically pooled so that administrators need to physically configure hardware to support a specific software application, which describes the function of a composable architecture. This type of transformative infrastructure is foundational…

Essential Characteristics of Cloud Computing as Digital Transformation

By pwsadmin | September 25, 2020

A survey of 2,000 executives conducted by Cognizant in 2016 identified the top five ways digital transformations generate value:      Accelerating speed to market      Strengthening competitive positioning      Boosting revenue growth      Raising employee productivity      Expanding the ability to acquire, engage, and retain customers   Digital transformation is also a cultural change. Cloud Computing as Digital Transformation Since cloud…

Embrace Transformation

By pwsadmin | September 22, 2020

From a business perspective, differentiating business processes and quality customer service are central to overall success. Business leaders must therefore clearly identify and measure how information technology contributes to the value of every key business process. They must also know how to most cost effectively use IT when the task is merely the management of…

Computer Vision Advances Zero-Defect Manufacturing

By pwsadmin | July 25, 2020

by Kevin L. Jackson Electronics manufacturers operate in a challenging environment. It’s hard enough to keep up with the ever-accelerating rate of change in the industry. Now customers want increasingly specialized product variations in less time and of higher quality. Meeting this demand for increased product variation can seriously impact the bottom line. Such variability increases…

Real-Time Analytics Power the Roadway of the Future

By pwsadmin | July 25, 2020

By Kevin L. Jackson The complexities of citywide traffic are pushing the limits of existing transportation management systems. Outdated infrastructure is based on proprietary, single-purpose subsystems, making it costly to acquire, operate, and maintain. And current roadways are simply not prepared for the future of autonomous vehicles. Enter the SPaT Challenge, an initiative encouraging cities and…

Thriving on the Edge: Developing CSP Edge Computing Strategy

By pwsadmin | March 6, 2020

Communications Service Providers (CSPs) are facing significant business model challenges. Referred to generally as edge computing, the possibilities introduced by the blending of 5G networks and distributed cloud computing technologies are redefining how CSPs operate, partner, and drive revenue. A new Ericsson Digital whitepaper entitled, “Edge computing and deployment strategies for communication service providers,” addresses these challenges…

SourceConnecte! Marketplace With A Mission

By pwsadmin | March 6, 2020

Earlier this year, GC GlobalNet launched a new breed of B2B e-commerce sites. Curated by Kevin L. Jackson, SourceConnecte (with an “e”) went live with three strategic goals in mind: Efficiently leverage modern social media technologies to facilitate value-based interactions between enterprise buyers and vetted suppliers; Establish a protected interactive environment capable of supporting high-value B2B e-commerce negotiations…

Potential vs. Reality: Is Edge Computing Real?

By pwsadmin | January 19, 2020

Edge computing provides compute, storage, and networking resources close to devices generating traffic. Its benefits are based on an ability to provide new services capable of meeting stringent operational requirements by minimizing both data latency and the need for bandwidth. Based on Google trend data, searches for the term has also grown substantially over the…

Enabling Digital Transformation

By pwsadmin | December 22, 2019

Digital transformation integrates technology into all areas of an organization’s business or mission. Its fundamental purpose is to create and deliver innovative and industry-changing products and services to a global customer base. This outcome requires the seamless two-way flow of data and information between internal business processes and external processes that interact with customers, business…

The ThinkShield Story Part 1: The Challenge

By G C Network | October 24, 2019

The cybersecurity challenge seems to be growing daily. Threats are becoming more sophisticated, and attacks are becoming more destructive while the corporate world’s response seems to resemble a deer in headlights. Recent examples of this dangerous state of affairs include[1]: A data breach of a US Customs and Border Protection surveillance contractor that led to…

(The following is the Executive Summary of a recent NJVC Executive Whitepaper. The full version is available at NJVC.com )

Cloud computing, as defined by the National Institute of Standards and Technology, is a model for enabling “… convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” NIST is implying the economies of scale that go with cloud computing when it refers to a pool of configurable computing resources.

Cloud computing is often referred to as a technology. However, it is actually a significant shift in the business and economic models for provisioning and consuming information technology (IT) that can lead to a significant cost savings. This cost savings can only be realized through the use of significant pooling of these “configurable computing resources” or resource pooling. According to NIST, this capability is an essential characteristic of cloud computing. Resource pooling is the ability of a cloud to serve multiple customers using a multi-tenant model with different physical and virtual resources dynamically assigned and reassigned according to demand.

Cloud computing economics depends on four customer population metrics:

  1. Number of Unique Customer Sets (n)
  2. Customer Set Duty Cycles (λ,f)
  3. Relative Duty Cycle Displacement (t)
  4. Customer Set Load (L)

These metrics drive the cloud provider’s ability to use the minimum amount of physical IT resources to service a maximum level of IT resource demand. Properly balancing these factors across a well characterized user group can lead to approximately 30-percent savings in IT resources, and enables the near real-time modification of the underlying physical infrastructure required for the delivery of the desired “illusion of infinite resources” synonymous with a cloud computing user’s experience.

When implemented properly, the cloud computing economic model can drastically reduce the operations and maintenance cost of IT infrastructures. A 2009 Booz Allen Hamilton (BAH) study concluded that a cloud computing approach could save 50 to 67 percent of the lifecycle cost for a 1,000-server deployment. Another Deloitte study confirmed that cloud deployments delivered greater investment returns with a shorter payback period when compared to the traditional on-premise delivery option.

In considering cloud computing for the Intelligence Community, security is an obvious concern. Given the legal and operational concerns, classified information should always be processed in properly protected and certified IC private or community clouds. If a secure cloud model can be designed, economic savings can certainly be realized.

When used to process unclassified information, sharing cloud computing resources can nominally provide the operational advantages of a private cloud with a cost closer to that of a public cloud due to the expected economies of scale from combined user communities.

The federal government is currently deploying a federal community cloud. Officially referred to as the General Services Administration Infrastructure as a Service Blanket Purchase Agreement (GSA IaaS BPA; item #4 in the White House CIO’s “25 Point Implementation Plan to Reform Federal Information Technology Management”), this Government Wide Acquisition Contract (GWAC) vehicle is designed to implement a community cloud economic model to support the federal government. The Office of Management and Budget (OMB) expects this community to provide approximately $20 billion in cloud computing services to a community made up of more than 25 agencies.

Using the BAH study as a guide, and assuming that community cloud economies mimic those expected from a hybrid cloud, transitioning IT services from an agency-owned IT infrastructure to the GSA IaaS platform should deliver benefit cost ratios of approximately 7:1.

Cloud computing provides some strong benefits and economic incentives. Selecting a public, private, hybrid or community cloud implementation will depend on a customer’s specific application, performance, security and compliance requirements. Proper deployment can provide significant savings, better IT services and a higher level of reliability.

  1. Lower Costs
  2. Cap-Ex Free Computing
  3. Deploy Projects Faster, Foster Innovation
  4. Scale as Needed
  5. Lower Maintenance Costs
  6. Resiliency and Redundancy
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10 Comments

  1. Shivan on October 3, 2011 at 7:19 pm

    Hi Kevin – thanks for the article, and more importantly, pointing me to your white paper. I've often heard, both personally as an employee of RightScale, that the main interest in cloud computing, be it private or public, irrespective of security concerns, focuses on the business agility enabled by cloud and the inherent innovation as a result. It seems, in your white paper and this executive summary, you list 'lower costs' as the primary benefit of cloud. Can you comment if this is the view of cloud via the federal government's eyes and if so, do you see that evolving as they mature in their use of cloud?

    Thanks in advance.


    Shivan

  2. Kevin L. Jackson on October 10, 2011 at 1:12 pm

    Most federal agencies are moving to cloud based on the "Cloud First" policy and the promise of reduced IT infrastructure cost. Unfortunately, many of the same agencies aren't actually implementing the appropriate operational or economic model. This failure is due to a misplaced focus on technology. Technology vendors also cause marketplace confusion by labeling everthing they do as cloud computing.

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