How cloud computing delivers economy-wide financial benefits and carbon reductions
Our interviews demonstrate the financial benefits firms have achieved from cloud computing and the potential for significant associated emissions reductions. In this section, we explain how evidence of financial benefits and carbon reductions achieved by cloud computing will translate into economy- wide benefits and emissions reductions.
Business case scenarios
The 11 global firms interviewed provided the data and insight necessary to build two scenarios to analyze the business case for cloud computing. The scenarios have been analyzed for the following hypothetical firm12
:
Firm profile • Sector: Food & Beverage (selected since it was identified as a sector with highly uniform IT requirements which could be most accurately modeled)
• Annual revenues: $10 billion • Employees: 60,000 • Global penetration: Operations in 30 countries
The firm is in a situation whereby it will lose operational support for its HR application within one year. We modeled the transition and operational costs associated with the following two scenarios over a five year period and compared them to the costs of simply upgrading to the latest version of the application:
Scenario 1
The firm moves to an HR application in the public cloud.
Scenario 2
The firm moves an HR application in the private (internal) cloud.
Scenario 1
Moving your HR application to the public cloud could save you $12 million over five years and cut CO2 emissions by 30,000 metric tons which is equivalent13
cars off the road for a year
Building on the data gathered through the interviews, we created a model to analyze the financial benefits and carbon reductions associated with a $10 billion global food & beverage firm moving its HR application from a dedicated IT environment to the public cloud. More detailed information on the model can be found in the appendix. This analysis finds that:
• The total lifetime cost of implementing and operating the public cloud solution over five years is $12.3 million. This compares to $24.6 million to upgrade and operate a dedicated IT solution over the same time frame.
• The investment in the public cloud solution pays back within the first year and has a NPV of $10.1 million over five years.
• CO2 emissions are reduced by 30,000 metric tons over five years as a result of more efficient use of hardware and more efficient data centers.
Scenario 2 to taking 5,900
Moving your HR application to the private cloud could save you $5 million over five years and cut CO2 emissions by 25,000 metric tons which is equivalent13
cars off the road for a year
The same $10 billion global food & beverage firm was also analyzed in terms of moving its HR application from a dedicated IT environment to a private cloud. This analysis finds that:
• The total lifetime cost of implementing and operating the private cloud solution over five years is $20 million (this compares to $12.3 million for public cloud. The additional costs relate to a greater implementation effort required for a private cloud as well as a higher number of employees to support the private cloud service). This compares to $24.6 million to upgrade and operate a dedicated IT solution over the same time frame.
• The investment in the private cloud solution pays back within year two and has a NPV of $4.4 million over five years.
• CO2 emissions are reduced by 25,000 metric tons over five years as a result of more efficient use of hardware and more efficient data centers.
to taking 4,900
14
12. See appendix for the key inputs to the business case 13. Environmental Protection Agency – Green Power Equivalency Calculator
http://www.epa.gov/greenpower/ pubs/
calcmeth.htm
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