Appendix Business case model
The business case was developed for a hypothetical food & beverage firm with $10 billion of annual revenues, 60,000 employees and operations in over 30 countries. Five years is the typical lifespan of an HR application so the business case is evaluated over this time period. Implementation as well
as operational costs are considered and this includes the costs of running the legacy dedicated IT model in ‘Year 1’ while the cloud service is being implemented. License fees still apply in the private cloud model since it is an internal private cloud where the firm is still required to buy the license and then set up the cloud service independently.
Scenario 1 Scenario definition
This scenario looks at the business case for switching from an HR application deployed on dedicated IT to an HR system in the public cloud.
Upfront investment costs Hardware purchase
Implementation Headcount reduction
Cloud costs Capital costs
Operational costs
Cost savings Capital costs
Hardware owned and managed by cloud provider so no purchase necessary
Costs relate to data migration and training
75% of the FTEs supporting the application no longer required
None
Annual subscription fee and limited FTE support
No license fee required or ongoing server replacement program. No system customizations necessary which would be expected from an upgrade to the latest HR system deployed on a dedicated IT environment
Operational costs
No electricity payments and reduced FTE support costs
Scenario 2
The HR application is currently deployed on dedicated IT and will lose operational support within one year.
This scenario looks at the business case for switching from an HR application deployed on dedicated IT to an HR system in the private (internal) cloud.
No upfront investment in hardware as existing servers can be virtualized
Costs relate to data migration, system customisation, server virtualization and training
25% of the FTEs supporting the application no longer required
License for software & ongoing server replacement program
Electricity bills and FTE support
Reduced server replacement program due to virtualization of servers
Reduced FTE costs and electricity payments (as a result of reduced number of servers)
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