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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