Two views of Cloud computing cost

Here is an analysis of the popularity of Amazon’s cloud computing platform.   There is a good analysis of what Amazon’s cloud computing adoption rate is, but eventually it is deemed “significant”.   A reason to explain its popularity is then proposed : minimal cost and reduced friction:

Inside Amazon’s Cloud: Just How Many Customer Projects? – CIO.com – Business Technology Leadership

Something we discuss with companies all the time is the reduced friction in using cloud computing. Instead of the lengthy and tiresome resource request process common in IT organizations, cloud computing resources can be available with practically no overhead. Request resources via a web page, indicating parameters like amount of storage, etc., and press a button: minutes later resources are available. If you’ve ever bought a book on Amazon, you’re qualified to begin cloud computing (the process for the just announced vCloud Express product from VMware and its service provider partners is nearly as painless).

Next comes a contrary view from McKinsey that suggests Amazon is massively expensive compared to the internal data center.  The author tries to understand where they might have under-estimated the internal data center cost.  Among the numbers employed is an interesting standard IT employment rate of 2.3% of staff.  Really?   So for a staff of 500, that would be 12 IT people?  Would that include managers?

McKinsey Cloud Computing Report Conclusions Don’t Add Up – CIO.com – Business Technology Leadership

The client appears to a be a good-sized company, since one of the pages lists headcount for the IT organization and compares the total as-is vs. post-Amazon migration. Today’s IT headcount stands at 1704. In typical companies IT represents about 2.3 percent of total staff; this would indicate a company with around 75,000 employees (however, financial services companies are heavy IT users, so IT might represent a higher portion of total employment, thereby reducing the employee population of the company somewhat).

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Published in: on October 15, 2009 at 5:53 pm  Leave a Comment  

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