Moving to the cloud makes great financial sense, says IDC

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A detailed study from the International Data Center (IDC) has shown that companies who use the Amazon Web Services (AWS) cloud make substantial savings over time.

The report, titled ‘Business Value of Amazon Web Services Accelerates Over Time’ and commissioned by AWS, saw the research house interview representatives from 11 organisations which had deployed AWS onto their services.

According to IDC, after three years enterprises should expect to see three and a half times their investment in AWS; and after five years the realisation would be $8.40 per every $1 invested.

“While all customers had enjoyed positive returns on their investment, there is a definite correlation between the length of time they had been AWS customers and their returns”, the report states.

The key statistics from the report are:

  • Those who used AWS saw a 626% ROI over five years
  • Overall companies in the cloud saved an average of 70% in total cost of ownership (TCO) compared to in-house infrastructure
  • IT staff productivity increased by 52%, with developer hours reduced by 80%
  • Companies who had moved to the cloud experienced fewer service disruptions and quicker recovery time. Downtime was reduced by 72%

According to the report, the biggest benefit experienced with adoption onto the infrastructure-as-a-service AWS cloud was lower capital and operational costs from the Amazon infrastructure.

Increased productivity from developers and IT staff contributed to nearly a third of the overall financial benefits.

Specifically, of the nearly $519,000 (£336,000) enterprises annually save per app on AWS; $275,000 (£176,000) went on infrastructure and services related to cost reduction.

And of that $275,000, $190,000 was saved on maintaining servers, with hosting ($50,000), networking equipment and bandwidth ($21,000) and storage ($13,000) behind.

Amazon, of course, has had its fair share of press recently concerning uptime – or lack of it, following storms in Virginia which knocked their EC2 cloud out between June 30 and 31.

But according to the IDC report, compared to non-cloud based services, downtime was reduced on average 72% having moved to AWS.

“The robustness or quality of service is often measured in unplanned downtime and is the number one reason companies switch providers”, the report claims.

Crunching the numbers, AWS showed a 29% improvement on in-house services (2.00 compared to 2.82 downtime events per year); downtime hours altogether saw an improvement by three quarters (4.12 hours for AWS compared to 7.755 elsewhere) and overall uptime was at 99.975% with AWS – a 95% improvement on in-house (99.495%).

“Our findings show that AWS has an outstanding track record regarding availability”, said report co-author Stephen Hendrick, adding: “However, service interruptions are inevitable regardless of whether applications are deployed on-premise, on AWS or elsewhere”.

Some of the challenges IDC noted in the report included integrating legacy systems, and ended up as a potential forewarning to the difficulties of cloud hosting.

“Rehosting applications may require some re-engineering, especially if the client side of the application requires a proprietary runtime and/or the application does not leverage web services between the client and the server.

“Consequently, integration remains a challenge because the architecture and the modularity of legacy applications are highly variable,” the report states.

Evidently, this is almost all good news on the surface, but should we take a pinch of salt about an IDC report praising Amazon to the heavens…commissioned by AWS?

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