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Squeezing savings from the cloud

Nancy Gohring | April 23, 2013
Determining whether cloud services will pay off is an extremely complicated process. Here's how to compute the ROI.

In 2009, when Northern Kentucky University switched from an on-premises installation of Exchange for student email to Microsoft's hosted offering, known then as Live@edu, it didn't save money as a result of the change. But the university gained value because the service allowed for easy integration with smartphones and online storage with Microsoft's SkyDrive service. "Even though the costs were flat, it provided more services to students," says Tim Ferguson, CIO at the university.

Just Say No -- Even Temporarily

Northern Kentucky University is also in the midst of a transition to using virtual desktops rather than physical systems for its computer labs, and it has been turning down vendor offers that just don't make sense economically, hoping that still-to-come products and pricing models will eventually meet its needs.

The university decided to approach the project in "baby steps," by running the virtual desktop software on premises with the idea of transitioning it to a public cloud later, says Ferguson.

About 18 months ago, the university did trials of virtual desktop software from a few vendors, all hosted in-house. The systems didn't meet expectations in terms of either price or performance, so the university declined to implement any of the vendors' offerings. "They were surprised. We said, 'Here it is in black and white. You'll cost us more money. The ROI is not good enough. Come back to me when you can solve it,'" Ferguson says.

Since then, the university has deployed VMware's View virtual desktop software in-house and is about to start trials running the software on Dell's public cloud, and possibly others. Ferguson expects to have transitioned all of the university's labs to virtual desktops hosted in a public cloud by 2014 or 2015, and he expects that move to cut costs by about 30%.

The university closely tracks costs in order to be able to present current expenditures to vendors. For the virtual desktop project, Ferguson knows how many staff members support the current implementation, what the hardware costs and how much work is involved in doing things like deploying patches. He also knows when peaks and valleys in usage occur -- and that's important information that could help the university find savings in a move to a public cloud.

The data comes in handy when working with potential vendors, he says. "If I clearly articulate what it costs today, if they can't save me money, why do it?" he says. "If you can't articulate that, it's kind of hard to ask a vendor to do something for you."

One way that Northern Kentucky is making sure cloud services save money is by pushing its vendors to offer true usage-based pricing. Many SaaS vendors that Ferguson has looked at try to charge on a per-seat basis. But that model doesn't make sense for a university that has slow times during the summer and holiday breaks. At peak usage, per-seat pricing would save the university money, but on average, because of the valleys, that model often ends up costing more than running apps in-house.


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