RESEARCH PAPER: The Business Value of Cloud-Enabled Managed Hosting

By Gina Longoria - April 8, 2016
Businesses face an almost overwhelming number of options for moving to “the cloud” to modernize IT capabilities and expand beyond traditional service models. Options include a combination of traditional on-premises datacenter capabilities and a wide range of cloud services deployment models. When evaluating the available options, IT should look beyond initial hardware and software expenses, as they are just a small piece of puzzle. A total cost of ownership (TCO) comparison over the lifetime of a project that includes capital expenses (on-premises hardware / software), operating expenses (services, support, and maintenance frees), and indirect costs (potential downtime and time-to-market delays) is a vital tool when comparing solutions. A transition to the cloud will change the TCO analysis model, as the capital expense and end-of-life requirements around hardware are removed, and business considerations must morph to include the flexibility and agility of a cloud deployment model. You can view the paper here. rsglp_logo

Table of Contents

  • Executive Summary
  • The Importance of IT to Drive Business Growth
  • Not all Solutions are Created Equal
  • The Benefit of Managed Services
  • Potential TCO Savings with Dedicated Hosting vs. a Self-Managed on-Premises Solution
  • Model Overview
  • Capital Expenses
  • Operating Expenses
  • Indirect Costs
  • TCO Summary
  • Using IT Resources to Maximize Margins
  • Call to Action
  • Appendixes
  • Appendix A: Hardware & Software Configuration for the On-Premises Scenario
  • Appendix B: Operating Expenses (Non-Personnel) for the On-Premises Scenario
  • Appendix C: Personnel Assumptions for On-Premises & Rackspace Scenarios
  • Table 1: IT Deployment Model Considerations
  • Figure 1: 3-Year TCO Summary of On-Premises vs. Rackspace Dedicated Hosing Solution
  • Table 2: Total 3-Year Capital Expenses
  • Table 3: Internal IT Requirements (FTES)
  • Table 4: Personnel Costs
  • Table 5: Total 3-Year Operating Expenses
  • Figure 2: Availability & Downtime
  • Table 6: Productivity Impact Due to Downtime
  • Table 7: Revenue Impact Due to Downtime
  • Table 8: Reputation & Loyalty Impact Due to Downtime
  • Table 9: Additional Business Impacts Due to Downtime
  • Table 10: Deployment Delays Due to Expansion
  • Table 11: Total 3-Year Indirect Costs
  • Table 12: 3-Year TCO Summary of On-Premises vs. Rackspace Dedicated Hosting Solution

Companies Cited

  • Amazon
  • Microsoft
  • Rackspace
  • Red Hat
  • Six Flags
  • U.S. Bureau of Labor Statistics
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