The Economics of the Cloud for Public Sector

In some of my previous blog posts, I talked about some of the concerns about the cloud and also outlined the perceived benefits. These benefits included:

• Reduce and control costs
• Enabling Innovation
• Reliability
• High Availability
• Accessibility

While from a technology perspective, we are able to explain and realize the benefits of the cloud, it seems that there is still some uncertainty regarding exactly how the cloud does help us control costs, specifcally in the public sector. A lot of us in the IT field are being questioned, challenged, and sometimes pressured by our finance departments, committees, advisory boards, etc. to start adopting cloud because of the economic impact. As a technologist, I’ve always assumed there will be a cost savings in the cloud simply because of specific benefits like the reduction in hardware on premises and the ability to pay based on usage (elasticity) instead always paying for maximum througput. That being said, there are a lot of different analyses and white papers out there that try to attribute hard cost savings to the cloud but most of these studies were done by technologists, and not by those people who approach the cloud from a cost perspective only. Our Public Sector team at Microsoft has put together a great detailed analysis of the “Economics of the Cloud or Public Sector” which can help both technology and business decision makers understand the financial impact of the cloud.

Abstract

“Computing is undergoing a seismic shift from client/server to the cloud, a shift similar in importance and impact to the transition from mainframe to client/server. Speculation abounds on how this new era will evolve in the coming years, and IT leaders have a critical need for a clear vision of where the industry is heading. We believe the best way to form this vision is to understand the underlying economics driving the long-term trend. In this paper, we will assess the economics of the cloud by using in-depth modeling. We then use this framework to better understand the long-term IT landscape.”

US Public Sector Cloud Economics.pdf

You can also download a copy of this white paper on my SkyDrive here.