Private vs. Public Cloud Financial Analysis
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The costs of cloud computing scale the whole price range from the inexpensive to the very expensive. For example, for less than $5,000 you could deploy your own private cloud in under an hour just by downloading the necessary software. With public clouds, you usually don’t need to purchase any hardware or software, so they can start as low as $100. ASG recently completed a financial analysis comparing three scenarios: a Public Cloud Infrastructure from Amazon Elastic Compute Cloud (EC2), a purchased Private Cloud infrastructure, and a leased Private Cloud infrastructure. Based on this analysis, a Private Cloud solution—whether leased or purchased—can provide significant cost advantages, as well as providing superior uptime and downstream flexibility for future growth. |
| Cost Comparison Over 3 Years Without Depreciation | ||||
| Year 1 | Year 2 | Year 3 | Cumulative | |
| Option 1: Public Cloud | ||||
| Capital Expense | $ - | $ - | $ - | $ - |
| Operating Expenses | $ 314,525.00 | $ 361,703.75 | $ 415,959.31 | $ 1,092,188.06 |
| TOTAL | $ 314,525.00 | $ 361,703.75 | $ 415,959.31 | $ 1,092,188.06 |
| Option 2: Private Cloud Purchase | ||||
| Capital Expense | $ 315,446.94 | $ - | $ - | $ 315,446.94 |
| Operating Expenses | $ 90,948.80 | $ 86,248.80 | $ 86,248.80 | $ 263,446.40 |
| TOTAL | $ 406,395.74 | $ 86,248.80 | $ 86,248.80 | $ 578,893.34 |
| Option 3: Private Cloud Lease | ||||
| Capital Expense | $ - | $ - | $ - | $ - |
| Operating Expenses | $ 203,904.80 | $ 199,204.80 | $ 199,204.80 | $ 602,314.40 |
| TOTAL | $ 203,904.80 | $ 199,204.80 | $ 199,204.80 | $ 602,314.40 |
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This analysis represents a $513,295 cumulative cost savings over three years for the Private Cloud Purchase scenario over that of the Public Cloud scenario. In addition, if minimizing Capital Expenditures is of primary consideration, the Private Cloud Lease option saves $489,874 over three years, and $110,620 in the first year, when compared to the Public Cloud Option. Advanced Systems Group—Stairway to the Cloud |
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