A Better Metric for Analyzing the Value of the Cloud

If you acquire your infrastructure through a public Cloud provider you have a fixed cost per unit of CPU, storage and memory, but, you still need to accurately estimate your usage over a time period, such as a year, to get a clear picture of your TSC. This can be trickier than you think since public Clouds are subject to unintended usage, such as hackers and denial-of-service attacks, which can run up your costs inadvertently. Your costs of operations should include the salaries of any human resources required to monitor and operate the service, inclusive of technical support. Your Cloud provider may offer this for an additional monthly cost or you can outsource this need for a fixed monthly fee. You can also outsource the development and maintenance of your software to a firm in India, China or Eastern Europe, which leverages all open source projects and keeps your development costs relatively low.

At this point, you’ve laid out very little capital to get started, your development costs were kept relatively low and you’re service is being managed by your Cloud provider. This sounds resoundingly like the story many startups delivering Cloud-based services are prescribing as success. However, because you highly leveraged with a significant number of dependencies on external agencies, your cost of risk is significantly higher than if you has hosted it in a co-located facility with less compute capacity and used your own employees, which maintains knowledge internally to your company, which causes you to set a higher price point for your unit of billing, which results in slower uptake in sales.

This example is not designed to deter Cloud adoption, but merely to illustrate that common CapEx/OpEx, TCO, or ROI calculations that have been expressed to date, at best, illustrate the immaturity of understanding of the costs associated with Cloud computing from the perspective of being a Cloud tenant.

I propose that the TSC, with its SOA foundation, while rudimentary, is a more effective metric for costing and analyzing Cloud computing alternatives than what has been proposed to date.

JP Morgenthal works as a senior principal architect with QinetiQ North America’s Mission Systems Group providing enterprise and SOA architecture guidance for federal civilian agencies and an independent analyst for jpmorgenthal.com. Prior to joining QinetiQ NA, JP founded Avorcor where he developed a SOA-based Enterprise retail/manufacturing Platform as a service PaaS that has been the foundation of three award-winning industry solutions for customers. Morgenthal is also author of Enterprise Information Integration: A Pragmatic Approach, which defines a methodology for using SOA and semantics to simplify integration.