Investments in information technology have a direct and fundamental impact on the success of an organization's revenue-generating activities. As a consequence, the business' financial leadership has a crucial stake in understanding and influencing IT decisions. The presentation content focuses on a three-stage approach geared toward building profit models around well-planned cloud implementations. Discover how CFOs are in a unique position to lead this effort and make the IT organization aware of its impact on revenue and profitability

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3. Learning Objectives
After participating in this event you will be able to:
• Define why "Cloud Computing Always Saves You Money" is a myth
• Define how your organization can deploy three stages of cloud technology to
improve revenue
•Define how to "Drive Up IT Business Relevancy by Mapping Cloud Economics to the
Business"
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4. 4 © 2011 Forrester Research, Inc. Reproduction Prohibited

5. Activate Cloud Economics
Maximizing the benefits of cloud computing
James Staten. VP and Principal Analyst
5 © 2009 Forrester Research, Inc. Reproduction Prohibited
2011

6. Scale out turns on the
cloud.
Scaling down turns on cloud
economics.
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7. What makes a cloud a cloud
Definition:
A standardized IT capability (services, software,
or infrastructure) delivered in a pay-per-use,
self-service way.
7 © 2011 Forrester Research, Inc. Reproduction Prohibited

8. Not everything is cloud . . . and shouldn’t be
Deliver New
Cloud Economics
Web
Traditional IT Dedicated Cloud
services
hosting Storage billing
VM -as-a-
DC MSP SaaS service IaaS
outsourcing
hosting
On- DB-as-a- PaaS
ASP
IT demand service
virtualization scaling
Traditional computing Cloud computing
• Fixed cost/terms • Variable costs/terms
• Varied deployments • Standardized deployments
• Single tenant •Multitenant
• More manual • Highly automated
• High control • Low control
• High customization •Limited customization
8 © 2011 Forrester Research, Inc. Reproduction Prohibited

9. Speed Is Still The Biggest Driver For Cloud Adoption
“How important were the following in your firm’s decision to adopt cloud computing IaaS?”
4 5 - Very important
On-demand capacity and scalability (available when
34% 45%
needed, now and in the future)
Lower capital expenditures by purchasing services
33% 38%
instead
Improved IT infrastructure manageability and flexibility 39% 32%
Lower total cost of ownership for servers 29% 39%
Provides developers with fast, easy resources for test
37% 26%
and development
Faster time to market with new business capabilities 34% 27%
Improved disaster recovery and business continuity 32% 29%
Ability to use as peak capacity for times of high
27% 32%
usage, such as the holiday season
Temporary or project-based capacity needs, like
28% 22%
special projects
Improved power and cooling efficiency 23% 20%
Base: 148 North American and European IT decision makers at enterprises who have implemented or have plans to implement
SaaS
Source: Forrsights Hardware Survey, Q3 2011
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10. Enterprise cloud use examples
 AP — enabling content mashups and
new uses via a cloud API
 NASDAQ — Market Replay service
 US Army — Testing troop
vulnerability application on cloud
platform
 Pathwork Diagnostics — cancer
tissue analysis
10 © 2011 Forrester Research, Inc. Reproduction Prohibited
Sources: www.NASDAQ.com, www.espnfanzone.com, Indy500.com

11. The basics of cloud economics
Elastic scale delivers just-in-time capacity
• As demand rises, resources are added.
• Requires apps to scale out
• Load balancing governs
Pay-per-use keeps costs low
• No upfront payment
• No commitment whether you use it or not
• Costs aligned to use
Self-service fuels productivity
• If you can build it, you can deploy it — fast.
• API access drives use of automation.
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12. NVoicePay taps the cloud to expand its market
AP Assist: Enable electronic payments for SMBs
 90% of B2B invoice payments are still by check.
 Solution: SaaS-based vendor payment
– $0.40 per payment; free vendor sign-up
“Building a mission-critical B2B
– Tight integration with key SMB systems (i.e., ADP for car
payment network would have been
dealers, First Data payment clearing-house)
nearly impossible without the low
– Needed elastic scalability, fast deploy, and iteration
 Forecasted huge transaction volumes cost, pay-as-you-go [cloud].”
 Traditional hosting was more expensive — — Karla Friede, CEO, NVoicePay
wouldn’t achieve scale.
– Needed reusable cloud services to speed development
– Needed effectively 100% availability for ―Payment Dial Tone‖
 The alternative was to build a massively expensive data center.
12 © 2011 Forrester Research, Inc. Reproduction Prohibited
For more info, check out NVoicePay website (http://nvoicepay.com/wp-content/uploads/2010/10/NVoicePay-MS-Case-Study.pdf).

13. But cloud costs can be deceiving
$0.08 per hour for a Small VM
X 24 hours
X 30 days
= $57.60
Cost optics Add in network and storage costs
= $157.60/month
Traditional hosting for the same:
= $50/month
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14. The key to benefitting from the cloud
Elasticity
Transiency
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15. Turning cloud economics to your favor is the key
Elastic scale: Scaling down for profitability
• How quickly can you turn off resources no longer in use?
• How small can you get your base footprint?
• Are you leveraging caching as much as you can?
What you scale matters
• Discrete component scaling drives efficiency.
• Autoscaling cloud services often costs less.
• Where traffic goes affects cost.
When and where you do things matters
• Some cloud services have off-peak pricing concepts.
• Some cloud services have better costs for certain services/uses.
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16. How NVoicePay activates cloud economics
If it’s running, it’s cutting into profitability
 Profits are pennies on each $0.40 transaction
 Mission: Lower the cost of each payment
– Scale only when necessary
 Scale only what needs to be scaled when necessary
– Chatter can cost you
 Traffic flowing out of the cloud costs $$
 Keep this traffic to a minimum using:
– Caching, Batching, Rich-client actions
– Use cloud services to speed development
 Cloud-based Service Bus and Access Control
 Cloud-based Storage
16 © 2011 Forrester Research, Inc. Reproduction Prohibited
For more info, check out NVoicePay website (http://nvoicepay.com/wp-content/uploads/2010/10/NVoicePay-MS-Case-Study.pdf).

17. The Stage of Cloud Economic Maturity
Stage One: Scale Up
• Deploying transient applications that come and go based
on need, business cycles or other on-demand bases
• Leveraging elastic applications that grow with traffic loads
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18. Cost optimize your deployments
Dedicated
Virtual Cloud
hosting
hosting, infrastructure
(traditional
SaaS
outsourcing) Web
App Logic Web
DB (RAC) (static) Web
Custom Common
Fixed Transient
Owned Metered
18 © 2011 Forrester Research, Inc. Reproduction Prohibited

19. Cost optimize your portfolio - overall
Internal Virtual Public
Virtual Physical Trad out
cloud hosting cloud
Flexible
CapEx OpEx
OpEx
Common Custom Custom Common
Transient Fixed Fixed Transient
Metered Owned Owned Metered
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20. Cloud economics apply to public as well as private clouds
But who gets cloud economics is different with private cloud
Private cloud
Source: See the April 2009 ―Which Cloud Computing Platform Is Right For You?‖ report.
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21. The Stage of Cloud Economics
Stage One: Scale Up
• Deploying transient applications that come and go based on need,
business cycles or other on-demand bases
• Leveraging elastic applications that grow with traffic loads
Stage Two: Scale Down
• Using performance monitoring and consumption thresholds to reduce
application scale as soon as traffic subsides
• Optimizing application designs and architectures to finely control
application scale and shrink baseline footprint
Stage Three: Profit Center
• Designing or rearchitecting services around cloud economics that deliver
new profit potential for the company
• Deploying service over a hybrid architecture that matches the economics
of each application component
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22. Recommendations
Understand the profitability profile of cloud apps
• How does it generate revenue?
• What actions are taken to get that revenue?
• What components are involved?
• What does the transaction flow cost?
Analyze the performance profile
• What parts best belong on what type of deployment?
• Where can applications be replaced by SaaS?
• Are applications with transiency exhibiting this behavior?
Bake cloud economics into new app design
• Think cloud first – takes design changes
• Be prepared to move apps out of the cloud if their pattern
changes
• Revisit your portfolio often — as the cloud matures quickly.
22 Entire contents © 2008 Forrester Research, Inc. All rights reserved.

23. Thank you
James Staten
+1 650.581.3824
jstaten@forrester.com
@Staten7
www.forrester.com
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24. Today’s presentation powered by Forrester’s Forrsights
 Forrester’s Forrsights delivers forward-looking insight into:
 Buying behavior shifts
 Business model migrations
 Disruptive technologies (e.g. Cloud, Mobility, SaaS, Video)
 We help strategists at vendors responsible for setting strategy and
identifying market opportunities
 Data comes from more than 24,000 respondents from SMBs and enterprises
in 12 countries— with quotas set across 7 major verticals and sub-
segmentations available. Dedicated Forrsight Data Advisors work with clients
to offer guidance around using data to support strategic initiatives.
 Forrsights helps understand all the players – not just IT.
Business
Decision
IT Makers
Employee
Decision
Workforce
Makers
Buying
Decision
Want to see more Forrsights data? Email: Forrsights@forrester.com
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25. Polling Questions
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26. Panel Discussion and Q&A
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27. We will send you a follow-up survey and would
appreciate your feedback.
Please join us at www.proformative.com to ask any
additional questions you may have and to continue
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you heard from today.
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