Cost Benefit Analysis

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Time
12 hours 57 minutes
Difficulty
Intermediate
CEU/CPE
13
Video Transcription
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>> At this point, we've covered so
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much about Cloud architecture,
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the models, services, etc.
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All of the great characteristics of the Cloud.
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You may be jonesing to get your business
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>> up there in a Cloud deployment,
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>> take advantage of those measured services,
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all of those different environments you can provision.
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It just sounds so great.
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However, remember,
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>> when it comes to security in the Cloud
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>> and any justification for business,
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>> there has to be a rational,
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dispassionate calculation of the cost and benefits.
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Now we're going to talk about cost-benefit analysis.
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How do you truly justify
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>> and know that any activities
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>> you're doing in the Cloud
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>> are paying off for your organization?
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>> How do you justify it?
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We're going to talk about cost-benefit analysis,
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consideration for Cloud environments,
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we're going to talk about the different types of costs,
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and then the costs benefits
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that computing in Cloud environments provide.
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The benefits of Cloud computing
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and also many of the costs to consider
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>> are the following, personnel costs.
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>> Now, an On-premise solution,
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you're going to need people to maintain
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the hardware, configure the networks,
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monitor, make sure all the applications are secure,
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make sure that utilities are properly set up,
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make sure there's a factor of redundancy.
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That's a lot of different people,
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a lot of different skill sets that are needed.
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When you move to the Cloud as we talked
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about in the shared responsibility model,
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the Cloud provider takes on many of those costs
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associated with employees,
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and that decrease the overall
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personnel cost that come with administering
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>> and managing people at a On-premise solution.
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>> It also decreases the operational costs.
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Just those are the costs that come
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>> with maintaining the hardware
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>> and everything that goes into
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>> just keeping the operation going.
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>> This is related to the cost of maintenance,
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>> things like that,
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>> that also gets transferred to the Cloud provider
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depending on what Cloud service is being used
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>> and the nature of the deployment model.
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>> Regulatory costs transfer.
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Remember, based on your industry,
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there are going to be different sets of
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regulations that apply to that industry.
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We're going to go into many of
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those regulations in depth in future lessons,
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but for the time being, consider that
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>> when you shift some of your services to the Cloud,
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>> the cost that come with making sure
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>> that you have certain controls in place
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>> over all facets of your environments,
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>> many of those costs
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are transferred to the Cloud provider.
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Now that increases a security
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and compliance cost on you potentially
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>> that you need to audit
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>> and make sure that your Cloud provider is honoring
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>> and actually bearing the burden of those costs,
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>> but, they are transferred
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in large part through the Cloud provider.
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Capital expenditure.
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In order to have an On-premise,
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anything technical, you basically
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need to buy all this equipment.
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You need to expend money upfront to buy assets.
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Now, the benefit of Cloud,
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is that you're utilizing shared assets
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>> that the Cloud provider maintains.
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>> Now one of the disadvantages
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that from an accounting perspective,
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any asset depreciates over time.
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You can write off
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the expense of depreciation of
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an asset over time, however,
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you don't get that when you go to the Cloud,
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>> but, you don't have to have your funds tied up in
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>> the purchase of all this hardware,
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the Cloud provider is taking care of that.
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The most important thing,
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although there are benefits
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and reductions to these costs,
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they are all theoretical until you truly measure them.
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Before moving to the Cloud
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or even if you are currently in the Cloud,
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you really have a responsibility
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>> to examine each of these areas of cost
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>> and see what you're paying
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>> and see if it's possible to consider
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>> what the real benefit is going to be.
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>> What is the cost savings is going to be
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>> if you're moving to the Cloud
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>> or if you can find data from the past to demonstrate
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>> that your move from an On-premise solution
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>> to the Cloud was truly justified
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>> in terms of dollars and cents.
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>> Let's do a little reflection.
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How does your organization measure these costs?
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Sometimes decisions aren't always
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made based solely on data.
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There are, some are business drivers
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maybe needs for competitiveness,
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maybe there are opportunities
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>> that a business may want to take advantage
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>> of in the Cloud that may justify higher costs
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>> than managing a solution On-premise.
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>> However, you should measure
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and be aware of these costs only
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>> when you really measure those costs
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>> or you are able to capture
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>> whether there truly is a benefit.
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>> Do the benefits that come from it, outweigh the costs?
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Some benefits are going to be intangible,
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others are going to be very tangible,
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such as the dollars and
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cents related to maintaining IT infrastructure.
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Now I honestly asked, has your organization
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>> done a true cost-benefit analysis?
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>> Do every time they engage in a software as a service
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or any of the as a service models,
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how does your organization
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structure their cost-benefit analysis?
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You may not necessarily have a role
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>> where you are privy to this,
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>> but it's always an important consideration,
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especially when it comes to security.
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As we'll see in future modules,
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that unless you can really justify the cost
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>> or the value of an asset or data
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>> that you are protecting,
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>> you may be spending too much
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to protect something that doesn't have the true value.
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But only when you start with
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this cost-benefit analysis approach,
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do you really know definitively
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>> how things are being valued and measured?
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>> A lot to think about there.
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In summary, we talked about
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>> the types of costs reduced by the Cloud,
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>> we also talked about the cost-benefit considerations
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of Cloud deployments, and overall,
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I want to stress the point that,
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you have to know and establish
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your costs in order to truly be able
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>> to justify that your business value
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>> that's coming from the Cloud is accurate.
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>> See you in the next lesson.
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