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a combination of the two) based on data com-
ing from both in-house development and cloud
hosting. In particular for the hybrid of the two
worlds, we plan to elaborate on the cases where it
is more profitable and derive appropriate “rules-
of-thumb”, since we argue that this model will
be the one that will finally dominate the market.
In general, for companies it will be a big mind
change to give up the convenience and comfort of
local deployment, control, and operation to cloud
computing vendors but the advantages of cost
reduction, scalability, speed to market and high
powered computing will allow them to return to
their core business and differentiate themselves
from their competitors. For the cloud computing
vendor the key success factors will be to get the
variable pricing right, ensure sustainability of the
services provided, coordinate a smooth evolution
of the services and that the quality of the services
needs to be of a high value. Based on these, we
understand that a broad horizon of research topics
open up as described in the June 2009 issue of
ACM SIGACT News magazine.
potential providers and ISVs bill and provision
their services and potential customers calculate
their expenses. SaaS costs do not only include the
subscription fee but the customization and other
professional services fees as well. The subscription
fee can be charged based on the number of users,
on number of page views or based on metrics
coming from business oriented goals. PaaS and
IaaS costs are related to the infrastructure and
middleware utilized. The level of data storage
and transfer, networking, server and middleware
utilization are some of the measurements used by
providers to charge a customer.
On premise costs on the other hand are split
into software development costs and infrastructure
costs. Software development costs are related to
product drivers, such as the type of the application,
the process maturity, ability of the development
team to follow standard procedures, platform
drivers, related to non functional requirements of
the applications and personnel capabilities drivers.
Companies possessing their own IT department
and have the dilemma of selecting between in-
house and hosted SaaS solutions will find very
useful to predict software development costs,
as these costs define all relevant on-going costs
such as maintenance, training, upgrades and also
costs related to infrastructure. Infrastructure costs
are split into operational costs such as hardware,
maintenance and networking and business prem-
ises costs such as personnel, physical locations
and electricity costs. Infrastructure costs are tan-
gible assets and can be estimated more accurately
compared to software costs.
The choice of selecting between in house
development and cloud deployment is a dilemma
that nowadays concerns an increasing number of
companies. Cloud computing is a term covering a
wide range of online services and seems an attrac-
tive proposition for small medium companies that
seek to exploit IT services at lower costs, instant
time to market and limited risk. As mentioned
the initial investment remains to relatively low
levels compared to on premise development, the
CONCLUSION
In this chapter we have taken a first step towards
identifying all relevant costs of cloud computing
and on-premises infrastructure and software. We
proposed a three step decision model for evaluating
the two alternatives. Software development and
infrastructure costs, desired quality characteristics
of the application and expected number of users
are the main aspects that a software manager has
to consider. The final choice may be the deploy-
ment of an application on the cloud, on business
premises or by adopting a combination of the two
aforementioned alternatives.
A thorough analysis of the costs of cloud com-
puting solutions has been performed. All costs,
metrics and measurements related to Software as
a Service, Platform as a Service and Infrastructure
as a Service has been recorded in order to help
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