How much is the Cloud?

How much is the Cloud?

IT Performance Measurement for Cloud Computing

Prof. Dr. Frank Bensberg

Agenda



Introduction to Cloud Computing



IT Performance Measurement



IT Performance Measurement



The Total Cost of Ownership Approach

p pp



Summary & Lessons Learned

Cloud Computing in the Gartner Hype Cycle

3

Popularity of Cloud Computing – Google Trends

4

Do You work in the Cloud?

Definition Cloud Computing

Cloud Computing

Cloud computing is a model for enabling ubiquitous,

convenient, on-demand network access to a shared

pool of configurable computing resources (e.g.,

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

minimal management effort or service provider

interaction.

Source: NIST (2011)

Characteristics of Cloud Computing

On-demand Self-Service

1

A consumer can request computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction

Network Access

2 Network Access

Capabilities are available over the network and accessed through standard mechanisms

Resource Pooling

2

3 _g

The provider’s computing resources are pooled to serve multiple consumers

Rapid Elasticity

4

Capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale out

Measured Service

5 Measured Service

Resource usage can be monitored, controlled, and reported, providing transparency for both the provider and consumer of the utilized service.

5

7

Cloud Provider

 "A person, organization, or entity

Cloud Broker

 "…manages the use, performance and delivery of

A Reference Model of Cloud Computing

a ages e use, pe o a ce a d de e y o cloud services, and negotiates relationships

between Cloud Providers and Cloud Consumers."

Cloud Consumer

 "A person or organization that maintains a business relationship with, and uses service from,

Cloud Providers."

Cloud Carrier

 "An intermediary that provides

Cloud Auditor

 "A party that can conduct _{connectivity and transport of cloud} y p services from Cloud Providers to

Cloud Consumers."

 "A party that can conduct

independent assessment of cloud services, information system

operations, performance and

8

Source: NIST (2011).

p , p

security of the cloud implementation."

Agenda



Introduction to Cloud Computing



IT Performance Measurement



IT Performance Measurement



The Total Cost of Ownership Approach

p pp



Summary & Lessons Learned

Business Engineering Framework

B i

St t

Business Strategy

Business Processes

Applications

Applications

IT-Infrastructure

Business Engineering Framework

B i

St t

Business Strategy

Business Process Outsourcing

Business Processes

 Substitution of internal business

processes (Make) for external Services

Applications

processes (Make) for external Services (Buy)

Applications

IT-Infrastructure

11

Business Engineering Framework

B i

St t

Business Strategy

Business Processes

Cloud Sourcing

Applications

 Substitution of internal IT-Services (Make) for external, cloud-based Services (Buy)

Applications

 Cloud-based Services provide on demand infrastructure services

(computing, storage, network) and / or application services

IT-Infrastructure

application services

12

Performance Measurement for Cloud Computing

B i

St t

Business Strategy

Cloud Sourcing

Business Processes

g

Applications

Business Impact

Applications

Hard Benefits

Soft Benefits

Monetary Impact

Non Monetary Impact

IT-Infrastructure

Monetary Impact

Measures

Non-Monetary Impact

Measures

Agenda



Introduction to Cloud Computing



IT Performance Measurement



IT Performance Measurement



The Total Cost of Ownership Approach

p pp



Summary & Lessons Learned

Definition

T t l C

t f O

hi (TCO)

"purchasing tool and philosophy which is aimed at

understanding the true cost of buying a particular

Total Cost of Ownership (TCO)

understanding the true cost of buying a particular

good or service from a particular supplier"

Source: Ellram (1995) Source: Ellram (1995)

Typical TCO Elements of IT-Centers

Total Cost of Ownership

(TCO)

Direct Costs Indirect Costs

Hard-/Software Operations Administration End User Activities Down Time

Servers, Power,_{R S lf S t P d ti it} Servers, Desktop-PCs, Software Licenses Room, Maintenance, Labour

Labour Self Support, Hey Joe-Support

Productivity Losses

16

TCO Elements of a Cloud

Computing Costs

1

p

g

Storage Costs

price for computing time

1

g

price for persistent storage

2

Transfer Costs

Input/Output Costs

price for data transfer to cloud

4

p

p

price for data access

TCO Elements of a Cloud

Computing Costs

1

p

g

Storage Costs

price for computing time

1

g

price for persistent storage

2

Transfer Costs

Input/Output Costs

price for data transfer to cloud

4

p

p

price for data access

Life Insurance Company

Sample Business Case

Life Insurance Company

 Simulation of life Insurance contracts

 Simulation results are timely required to support risk & compliance management

 Simulation results are timely required to support risk & compliance management

 Heavy duty application with following performance parameters

 Computing power of 4,5 Teraflops required (peak performance)p g p , p q (p p )

 Equivalent to a server farm with 106 nodes

 Degree of utilisation amounts to 80%

 Storage capacity of 100 TB required

 Data transfers amount to 20 GB / hour

 Make or buy-problem:

 Operate the application in the Cloud or in our own IT-Center?

TCO

Cl d

_?

>

_TCO

IT C t

19

TCO

Cloud

_TCO

IT-Center

<

?

Business Case – TCO Results

20 Conclusion: own IT-Center is more attractive than Cloud (!)

Software Support for TCO Calculation – TCO-Tool



Open Source Tool

p



Supports



Design,

g



Calculation and



Analysis of TCO models

y



Open Source License



(LGPL)



Available at



Design of relevant cost categories

Hierarchical Structure of

th TCO C t C t

i

the TCO Cost Categories

Definition of Labour Costs

TCO Reporting

Agenda



Introduction to Cloud Computing



IT Performance Measurement



IT Performance Measurement



The Total Cost of Ownership Approach

p pp



Summary & Lessons Learned

Summary & Lessons Learned



Cloud Computing primary is an organisational principle of

IT-

Cloud Computing primary is an organisational principle of IT

service provisioning, which implies attractive economical

characteristics



To make the monetary impacts of Cloud Computing transparent,

the TCO approach can be applied, e. g. by use of TCO-Tool



The TCO approach requires a detailed specification of technical

parameters (e. g. required computing power, storage volumes)



The TCO approach does not catch the soft benefits of cloud

computing (e. g. increased user or customer satisfaction)



I

d

t

t l

t

d i i

f th

fi

i l



In order to support long-term decisions, further financial

parameters have to be considered, e.g. interest rates and taxes



In addition risks of Cloud Computing also have to be

26



In addition, risks of Cloud Computing also have to be

Thanks for

your attention!

your attention!

List of References

Alpar, P., Alt, R., Bensberg, F., Grob, H. L., Weimann, P., Winter, R., Alt, R., Bensberg, F. (2011) A d i ti t Wi t h ft i f tik St t i h Pl

(2011), Anwendungsorientierte Wirtschaftsinformatik – Strategische Planung,

Entwicklung und Nutzung von Informationssystemen, 6., überarb. u. aktual. Aufl.,

Wiesbaden 2011.

Ellram, L. M. (1995), Total Cost of Ownership – An Analysis Approach for Purchasing, in: International Journal of Physical Distribution & Logistics Management, 25. Vol., Nr. 8, S. 4–23 (1995).

Grob, H. L., Reepmeyer, J.-A., Bensberg, F. (2004), Einführung in die

Wirtschaftsinformatik, 5., vollst. überarb. u. erw. Aufl., München 2004.

NIST (Hrsg.) (2010), NIST Cloud Computing Reference Architecture, Special Publication 500-292 of the National Institute of Standards and Technology (NIST), Gaithersburg

2011.

Voorsluys,W., Broberg, J., Buyya, R. (2011). Introduction to Cloud Computing, in: Cloud Computing – Principles and Paradigms, Hrsg.: R. Buyya et al., Hoboken 2011.