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This blog is part of The ROI of Private Cloud series which discusses key concepts in projecting ROI, as well as the detailed analyses of three organizations looking to move to private cloud. Dell EMC Services has performed ROI analyses for dozens of organizations looking to move to private cloud, each with varying transformation scope and objectives. Let’s take a look at one example: a regional healthcare provider looking to move to private cloud to improve developer productivity. ScenarioThis healthcare provider was looking to better support the application developers aligned to the business units. There were specific challenges that impacted their IT organization’s ability to provide the services that the development teams needed. They had no service catalog; they only had internal rate cards. There was no automation, and no self-service capability. It typically took weeks, and even months, to provision services to the project teams. As a result, the application development teams were using external vendors to get the infrastructure services needed to support development activities. IT needed way to provide their developers with an automated, self-service environment with rapid provisioning of infrastructure services meet development needs and timelines, and to discourage Shadow IT. To address this, the IT organization was looking to implement a private cloud with Enterprise Hybrid Cloud deployed on mirrored VCE Vblock systems as the foundation for their development environment. Key characteristics of the platform included:
Current and Target EnvironmentsThis organization had two parallel sites that they wanted to maintain for their key application development and maintenance workloads. This included 150 existing applications across 2,000 servers that were needed to support development and maintenance activities. These 2000 servers would be replaced by two VCE Vblock systems. All 150 applications would be migrated to the new environment. An initial Infrastructure as a Service (IaaS) service catalog of Linux and Windows servers would be deployed. The transformation included adapting existing service operation, changed control and security processes for the new environment, as well as creating a new service portfolio management process, and aligning IT and application development staff to these processes.
ROI AnalysisThis organization was pursuing a comprehensive transformation that included people, processes and technology. The analysis was based on the projected savings through improving processes, aligning the organization, as well as the cost benefit analysis of hardware and software consolidation. The metrics used to determine the ROI included the run rate savings, total investment, and net savings over five years.
The projected Net Savings is $9.0M (33% cost savings over BAU costs) with an NPV of $7.6M. Investment costs, including both capital and services investments required for the transformation, are $9.4M with an NPV of $8.7M. The ROI is 96%, driven by the moderate total investment relative to the run rate savings. The Payback Period is 2.7 years.
Key benefits of the transformation include:
In conclusion, the analysis shows how this organization could dramatically reduce provisioning time for developers, reducing the overall development timeline, delivering apps faster, at rates better than market. In addition, though not captured in this study, there are additional savings in the cost avoidance of paying premium pricing for shadow IT services. Establishing a self-service catalog with transparent rates in addition to a customer focused communication plan would lead to the reduction of shadow IT spend. Learn more about the typical savings that can be achieved and see the detailed ROI analyses of other organizations in The ROI of Private Cloud: Quantifying the Cost Savings and Benefits of Moving to a Private Cloud:
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