VMware Cloud on AWS is an integrated cloud offering jointly developed by AWS and VMware. VMware Cloud on AWS provides customers with a scalable solution to migrate and extend their on-premises vSphere-based environments to the public cloud.
VMware commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential ROI enterprises may realize by deploying VMware Cloud on AWS. The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of VMware Cloud on AWS on their organizations.
Prior to using VMware Cloud on AWS, the customers maintained their own (larger)on-premises vSphere environments. These data center environments required expensive systems maintenance, hardware refresh, and real estate and power/cooling costs. Organizations previously explored moving to the cloud prior to the availability of VMware Cloud on AWS, but they determined that doing so would have required:significant business disruptions;re-architecture of applications to run natively in the public cloud;and the investment in new cloud development and operations skills.
Quantified benefits.The following risk-adjusted present value (PV) quantified benefits are representative of those experienced by the companies interviewed:
- Avoided application redesign, totaling savings of $2.5M.Organizations utilized VMware’s vMotion bidirectional live application migration to seamlessly transition their vSphere workloads to the cloud. Furthermore, these organizations were able to use their existing Software Defined Data Center (SDDC)technologies to facilitate and manage migrations, avoiding the need to redesign applications or adopt new management tooling.
- Reduced labor hours for operations, saving $1.2M. Eliminating physical servers and networking hardware, along with simplifying operating models, created a reduced demand for operations staff who were dedicated to managing on-premises VMware environments within interviewed organizations.
- Reduction in data center operating costs, totaling $1.4M.Organizations retired their on-premises deployments, eliminating the power, cooling, and facilities staff expenditures.
- Software and hardware savingsof $3.2M.Organizations used their migration to the cloud as an opportunity to consolidate their networking and storage environments,facilitating a reduction in licensing fees.Furthermore,organizations avoided hardware refreshes required to maintain modern data center operations.
Unquantified benefits.The interviewed organizations experienced the following benefits,which are not quantified for this study:
- Redeployed legacy servers to accommodate user upgrades. One organization redeployed legacy servers to provision additional memory for end user email accounts.
- Accelerated speed of disaster recovery operations. Organizations found their new disaster recovery infrastructure to be faster and more reliable than their previous on-premises deployments.
- Improved security and reduced likelihood of business disruptions. Having more secure and responsive cloud-based disaster recovery operations reduced the risk of business disruptions.
- Enabled new agile operations. Being in the cloud enabled organizations to develop new business operations. One interviewed organization in broadcast media planned to use their new capabilities to rapidly deploy remote telecast teams.
- Improved employee morale. Interviewees explained that shifting resources from legacy networking to modern tools was more interesting for employees, noting that the reduction of maintenance time allowed teams the opportunity to explore new innovative projects.
- Enabled the termination of expensive commercial leases. Organizations in high-rent urban locations planned to not renew leases for buildings that were housing data centers, when they reached the end of their contract.
Reduction In Data Center Operating Costs
Migrating to the cloud enabled organizations to reduce their data center footprints, and in some cases, eliminate them entirely. Retiring physical hardware in data centers, i.e., from servers and supporting networking hardware,eliminated the need to pay for power, cooling, and maintenance staff.
The director of internal IT for a B2B software firm said, “If I look at the support costs (you know,the hidden cost of every piece of hardware) there’ shundreds of thousands of dollars a year in support costs that are going away. Our load balancers, our firewalls, our SAN, our switches,we’re shutting that all down. All footprints are going down 90% and we’re going to see a proportional savings in cooling and power.”
In modeling the reduction in data center operating costs, Forrester makes the following assumptions:
- The composite organization retires 80 servers.
- Retired servers are valued at $15,000. This cumulative value is uplifted 40% to estimate the associated power and cooling support costs.
- Support staff have an annual fully burdened salary of $130,000.
- Size of existing data center footprint.
- Geographic location and prevailing market rates for wages and electricity.
Software And Hardware Savings
Cloud migration to improved infrastructure has enabled organizations to consolidate their server support for applications. In doing so, they were also able to pare down the number of networking software licenses. In addition to discontinuing unnecessary software licenses, organizations avoided future hardware refreshes for end-of-life infrastructure.
The director of internal IT for a B2B software firm said:“We had $500,000 in hardware refreshes scheduled for last year,and we spent none of it.We also got a performance improvement, so there’s a perceived benefit there. It is pretty high-performing hardware [behind VMware Cloud on AWS] and the hypervisor is fast.”
- Annual software license expenditure of $2,000,000.
- Server value of $15,000.
- Forrester assumes that the hardware refresh cycle falls in Year 3 of the model.
- Organizational software needs and corresponding spend.
- Age of current infrastructure and organizational refresh policy.