Total Cost of Ownership

Whether you are an established corporation or an entrepreneur starting your own business, one of the key decisions that needs to be made is selecting the appropriate data infrastructure framework for your business. For today’s businesses to succeed, data needs to be accessible 24/7 from any location on a multitude of devices. While there are a number of variables to consider, the options are fundamentally straight-forward. You can either choose a cloud-based storage and application solution or an on-site solution.

Let us look at the example of emailing costs for an on-premises solution, and list the hardware and software requirements that would be needed when calculating the Total Cost of Ownership (TCO).

Categories	Cost Factor
Hardware	Servers, operating system, data center costs, power
Server software	Mail server software, client licenses, maintenance
Client software	Client-installed software, maintenance
Storage	Storage, redundancy, power
Message filtering	Installed filtering hardware or filtering service
Message archiving	Archiving monthly costs
Mobile messaging	Mail delivery and administration
Staffing	Administration for hardware, software, storage, and mobile
Financing	Cost of financing servers, storage, and software

(Schadler, 2009, p.4)

It is easy to see how quickly the costs could start adding up when you consider all of the requirements needed to run a stable, secure and efficient on-premises solution.

If you decide to choose a cloud computing solution, for a mere $50.00 per year ($5.00/month) per user, Google Apps provides their clients with a complete cloud-based solution, which completely negates the high cost and time involved for an on-premises solution.

Forrester Research completed a study in 2009, looking at cloud-based email. In the report, they compared on-premises email to different cloud computing alternatives and concluded that the TCO was dramatically lower when using a cloud computing alternative (Schadler). Furthermore, Forrester went on to say that “Google Apps cost less than 1/3rd as much as competing solutions” (Google, 2011a).

With this dramatic cost savings, why would a company or school district still be hesitant to convert over to a cloud-based solution? While the benefits for selecting or converting to a cloud-based solution are numerous, there are still some unexpected and hidden costs that companies need to take into account when determining if cloud-based applications and storage are the best option for them. The majority of these costs are related to bandwidth usage, as cloud computing providers charge uploading and downloading fees that can be quite high depending on the amount of data and the level of flexibility needed by a business. These costs may be acceptable for a business that needs instantaneous access to data, but for an educational facility, unlimited access to data may not be necessary. It isn’t to say that a cloud-based solution isn’t the more affordable option, but as mentioned previously, there are still a lot of variables to consider.

Security and Privacy

With significant cost savings (in most instances) and easy access to files, why would a company not convert their data infrastructure to cloud computing? According to a study released in October 2011 from ‘Harnessing Live Online Learning’, the two major concerns companies have with adopting cloud computing are online security and bandwidth. When examining the security aspect of cloud computing, many businesses are concerned with who can access their information and where their data is being stored (Redtray, 2011). Cloud computing services like Google Apps and Amazon Web Services are extremely secure; possibly even more secure than the traditional servers and hard drives that can be hacked, lost or stolen. Data in these clouds are broken up and stored in different physical locations, where each data chunk is randomly assigned a name and information is encrypted making it unreadable to the human eye. Data is only put back together when the user accesses a file with their user name and password.

There are multiple physical locations where data is stored for both Google Apps and Amazon Web Services. Each location is “strictly controlled both at the perimeter and at the building ingress points by professional security staff utilizing video surveillance, state of the art intrusion detection systems, and other electronic means. Authorized staff must pass two-factor authentication no fewer than three times to access data center floors” (Amazon Web Services, 2011, para. 4).

There are two videos regarding Google Apps security. The first examines the security of Google Apps and the second one takes a look at the security at the physical location of a Google Data center.

As cloud computing services like Google Apps and Amazon Web Services maintain a number of data centers that are geographically distributed (Google, 2011b), questions regarding legislative and geopolitical issues can arise. For instance, is your company or school district’s data being stored locally, in the same country, province or state, or is your data being stored in a remote location? If your data is being stored in a different location than your company or school district, it is important to do research regarding the laws in both locations regarding files in the cloud. On August 22, 2011, NBC’s ‘Press Here’ discussed cloud computing and the law with Gary Steele, Proofpoint’s CEO. They discussed issues surrounding legislative, geopolitical, security, and privacy concerns. Steele mentioned that it is important for companies to look at the data they want to put up in the cloud and to look at the agreements they make with their cloud provider. He also reminds companies that all cloud providers are not made equally and it is important to do thorough research to find the best fit for your company. Watch the video below for more information on privacy and security surrounding cloud computing.

Your Activity

We would like you to reflect on the question “What are the benefits to converting a business or school district to cloud computing?” Please use the ETEC 522 blog to post your reflection. Afterwards, take a few minutes to add some of your thoughts to our wiki; this is where we will come up with a group answer to this question.

References

Amazon Web Services. (2011). Amazon web services: Overview of security processes. Retrieved from http://aws.amazon.com/articles/1697?_encoding=UTF8&jiveRedirect=1

GoogleApps.(2008, December, 16). The security of Google apps [Video file]. Retrieved from https://www.youtube.com/watch?v=sU6scRn_L-I

GoogleApps. (2011, April, 13). Google data center security [Video file]. Retrieved from https://www.youtube.com/watch?v=1SCZzgfdTBo

Google. (2011a). Google apps for business: Increase productivity while reducing costs with Google apps. Retrieved from http://www.google.com/apps/intl/en/business/largeent.html

Google. (2011b). Security and privacy. Retrieved from http://www.google.com/support/a/bin/answer.py?answer=60762

Proffpoint. (2011, August 22). Cloud computing and the law: Gary Steele discusses cloud privacy and security on NBC’s press here [Video file]. Retrieved from http://blog.proofpoint.com/2011/08/cloud-computing-and-the-law-gary-steele-discusses-cloud-privacy-and-security-on-nbcs-press-here.html%20%20%20

Redtray. (2011). Cloud computing companies urged to tackle security fears in the workplace [Press release]. Retrieved from http://www.redtray.co.uk/news_2011_10_11.htm

Schadler, T. (2009). Should your email live in the cloud? A comparative cost analysis. Forrester Research, Inc. Retrieved from https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B5Y-fwYJF2hLMGJjMGNmZWItOWViYy00YTVhLWJmZGQtMTA2N2ZhMTRkYWNm&hl=en_US