Case Study: Making Cloud ROI a Reality

If there is no ROI for cloud computing, how can you ever convince your finance folks to move forward with it? In today’s enterprise, everything comes down to ROI and total cost of ownership. How does an IT manager achieve all of the above through virtualization of infrastructure and applications and storage in the cloud – and then present tangible, meaningful ROI data to senior management that justifies ongoing investment in these technologies? With the right tools in place, IT administrators can measure, report and justify on the following:

• Total Cost Savings: Not only does the cloud eliminate the cost of infrastructure, software and space, it also reduces the need to hire additional employees to manage an on-premise solution. Software upgrades and ongoing maintenance, which can feasibly take one full-time staff equivalent, are also outsourced in the cloud. A July 2011 study also confirmed that investing in cloud significantly reduces an organization’s overall carbon footprint, energy consumption costs and strengthens internal efficiencies and collaboration abilities.
• Increased Focus: A migration to the cloud improves service levels across the organization by focusing IT resources on staff-facing applications such as Web-access programs, customer relationship management and improving operations.
• Increased Visibility and Intelligence: Service providers can generally extract greater value from a solution due to their familiarity with the technology and motivation to increase client satisfaction levels.

Cloud ROI in Action: The Advocate Goes Virtual
If cost savings and increased visibility sound good to you, but you’re still on the hook for some actual numbers, consider this: a 2010 report by Forrester Research concludes that cloud computing costs an average of 74% less than running an in-house server room. The report goes on to reveal that storing 100 terabytes of cloud storage costs the average organization around $251,000 per year, compared to the $1 million price tag for internal storage.

One company who made the transition from a costly, in-house system to the outsourced cloud model has already seen a payback on its initial investment. In 2004, the Baton Rouge daily newspaper The Advocate needed to make some major changes that would not only impact the location of their headquarters, but their entire operations model. The publication wanted to move out of its aging building and relocate to a brand-new site, build two new distribution centers as well as a state-of-the-art printing facility. The brick-and-mortar infrastructure wasn’t the only aspect of the business model in need of an upgrade: the publication’s IT systems also needed modernization.

The staff of The Advocate had spent the last 50 years in the same downtown building in Baton Rouge that also housed their server room. The room was an array of ad-hoc servers, routers and switches, some of them dating back to 1970, when the organization bought its first mainframe computer.

The team began a cost analysis of building a completely new, on-premise server room at the new headquarters. But when taking into consideration the cost of new hardware, software, networking and the ongoing maintenance once the build was complete, they realized that this was too cost-prohibitive. They weren’t in the business of operating a data center – and didn’t want to be. Outsourcing made the most sense.

After an exhaustive vendor search, The Advocate chose Baton Rouge-based virtualization and disaster recovery expert Venyu. Six months before The Advocate staff moved out of its old headquarters, they worked with their cloud/disaster recovery vendor to build the new network nodes and install new off-site servers at Venyu’s managed data center facility.

By the time the move was complete, The Advocate’s network was already in place, which meant employees never even noticed the transition to the cloud – a big selling point for the publication’s editorial staff. Rather than investing hundreds of thousands of dollars in new servers, networking infrastructure and power/cooling, The Advocate leases physical servers from Venyu. They migrated from a 100% physical server environment with more than 50 in-house servers to a nearly 90% virtual, cloud-based environment with four physical and 60-75 virtual servers – all stored off-site and hosting 63 business applications used across the entire company.

After measuring the upfront investment in the new, outsourced solutions and comparing them to the costs associated with purchasing and maintaining physical servers, software licenses, backup, recovery, storage, power and cooling, The Advocate discovered that they achieved complete ROI on its systems infrastructure overhaul in under five years. The IT transformation, leveraging Venyu’s virtualization, offsite backup and disaster recovery services, included the migration from outmoded physical servers housed onsite to a sleek, efficient, outsourced network in a secure Venyu facility.

Today, The Advocate has a future goal of becoming a 100% virtual IT environment. Venyu’s virtualization and managed solutions removed the maintenance burden the publication’s IT team had experienced through years of physical, in-house servers, while giving the staff the monitoring and management tools they required to stay "hands on" with their infrastructure. Venyu’s Baton Rouge data center became its new IT infrastructure hub, giving the staff complete visibility into its physical and virtual servers along with 24 X 7 access to a physical business recovery center featuring 93 workspaces.

Not only has The Advocate improved its data server efficiencies, backup, data protection and disaster recovery strategy across multiple offices, lowering its datacenter maintenance costs by more than 50 percent, but the newspaper experienced no downtime during the costliest disaster in Louisiana and U.S. history: Hurricane Katrina.

The IT team had just completed the successful move to its virtualized infrastructure outsourced home in a Baton Rouge data center in August 2005 when Hurricane Katrina ravaged the Gulf Coast. While many organizations in Louisiana found their ability to conduct business as usual at a complete standstill due to the destruction from the fifth deadliest hurricane in U.S. history, The Advocate experienced no network downtime. In fact, the staff at the newspaper continued to put out daily editions on time, and even lent some of its Venyu-based backup workspace to a fellow publication, the New Orleans Times-Picayune, whose facility and network had been wiped out by flooding.

"Not only did our staff experience zero interruptions during the virtualization process with Venyu, but there was actually an improvement in performance as we began moving many applications and functions from the main physical servers to the virtual ones," noted Richard Shurley, CIO for The Advocate. "Meeting our ROI objectives on this project by cutting our storage budget in half has enabled our organization to streamline efficiencies and make investments in other initiatives that help the publication stay competitive, as opposed to constantly spending more on hardware and infrastructure."

Cloud Satisfaction: ROI and Beyond
Shurley is not alone in his enthusiasm for the cloud. According to a March 2012 report from Enterprise Management Associates (EMA), six in ten cloud computing customers say that they’ve been able to reduce their IT capital costs, and that cloud deployments have improved service quality, reduced IT operations costs, and reduced IT management complexity.

The real value in cloud computing, that transcends ROI and TCO, is when all boundaries are flexible to enable cross-cloud federation, collaboration and coordination. This is what gives customers maximum choice and flexibility in how to streamline costs and improve agility. When implemented properly and with the right vendor partner, cloud computing provides interoperability between multiple clouds, both within and outside the enterprise.