Nokia analysis shows substantial cost savings on moving to private cloud

Enterprises can break even on their private cloud investment in less than three years
Cloud, Cloud computing, Cloud services, Nokia, Private cloud, Research, Surveys

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Enterprises can expect to break even on their private cloud investment in less than three years, according to Nokia Enterprise Private Cloud TCO Model, a financial analysis conducted by Nokia. The analysis further states that most large enterprises can save a minimum of 25 percent on their IT costs over five years by moving to a private cloud from a legacy IT environment.

Nokia's model is based on a private cloud, or private-public hybrid cloud architecture that can be built at any large enterprise today, incorporating commercial components from a variety of vendors as well as open source components. The model also assumes that the cloud architecture is one that does not require 'forklift' replacement of the IT environment, but instead sits on top of the existing IT infrastructure as an overlay.

The analysis began with an existing budget for a representative legacy IT environment, and contrasted that with the requirements of a shift to a private cloud model and associated costs. The cost savings identified by the model were calculated using the most conservative assumptions available, based on the needs of highly regulated industries such as finance and healthcare. Further, increased costs, such as the costs of migrating legacy applications to the cloud, were calculated at the upper end of a possible range of values.

The model shows that the common assumption that private cloud is too difficult or costly to adopt is wrong, and that large enterprises should make the move directly to private or public-private hybrid cloud because it utilises off-the-shelf components and is less expensive.

Mike Loomis, head of the large enterprise segment at Nokia, said: "Our model addresses the core concerns most enterprise IT managers have: is this move worth the investment, and are the savings really there? Our analysis provides a resounding 'yes'. Better yet, IDC, a highly respected analyst firm, agrees."

Randy Perry, VP, business value strategy, IDC, said: "IDC has conducted an extensive analysis of the structure and operation of the Nokia enterprise private cloud TCO model. We are satisfied that the assumptions, all supported by 3rd party references, are reasonable and comprehensive enough to establish a fair comparison of total costs of private cloud and legacy environments. Also, the industry data and default settings fall within acceptable ranges based on IDC business value research with over 450 enterprises over the last two years. Finally, the algorithms and methodology for calculating cost savings are accurate and adhere to commonly accepted financial guidelines."

Nokia is offering a custom analysis free of charge for large enterprises from now until June 30, 2017

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