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nt. J. Business Information Systems, Vol. 27, No. 2, 2018 205
Copyright © 2018 Inderscience Enterprises Ltd.
Cost benefit analysis of cloud computing in
education
Kiran Bala Nayar*
JJT University,
Jhunjhunu, 333001,
Rajasthan, India
Email: mail2kiran7@gmail.com
*Corresponding author
Vikas Kumar
School of Business Studies,
Sharda University,
Plot No. 32–34, Knowledge Park-3,
Greater Noida, 201306, UP, India
Email: prof.vikaskumar@gmail.com
Abstract: Application of cloud computing in education not only relieves
the educational institutions from the burden of handling the complex
IT infrastructure management as well as maintenance activities, but also leads
to huge cost savings. Along with many industry sectors, education sector would
be largely benefited by adopting cloud services. Cloud promises to deliver
affordable, reliable and flexible computing solutions to the education sector and
enable it to compete more effectively with bigger organisations. The motive
of this paper is to analyse the approach that has been followed to identify
the benefits and limitations of cloud computing. Specific case of a lab setup
has been taken to illustrate the financial aspects. A comparative analysis of
cloud-based hosting versus conventional (on-premise) application deployment
has also been presented.
Keywords: cloud computing challenges; information and communication
technology; ICT; total cost of investment; TCO; return of investment; ROI;
cost factors; ROI factors.
Reference to this paper should be made as follows: Nayar, K.B. and Kumar, V.
(2018) ‘Cost benefit analysis of cloud computing in education’, Int. J. Business
Information Systems, Vol. 27, No. 2, pp.205–221.
Biographical notes: Kiran Bala Nayar received her Master in Computer
Science from MDU Rohtak India in 2005. She has ten years of teaching
experience. She has published a textbook along with various research papers in
national, international conferences and journals. Her area of research is cloud
computing with specific focus on the reliability of cloud applications during
disaster.
Vikas Kumar received his MSc in Electronics from Kurukshetra University,
Haryana, India and MSc in Computer Science and PhD degree from the same
university. His PhD work was in collaboration with CEERI, Pilani and he has
worked in a number of ISRO-sponsored projects. He is a life member of the
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.B. Nayar and V. Kuma
r
Indian Science Congress Association, Computer Society of India, IETE, ICEIE,
IPA, VEDA, IVS and Magnetic Society of India. Along with five books, he has
more than 100 research papers to his credit in various national and international
conferences and journals. His areas of interest include cloud computing, ICT
for development and electronic communication.
1 Introduction
Information and communication technology (ICT) has changed the role of education
from the classroom teaching to the process of preserving, transmitting and creating
knowledge for societal development. ICT removes the big constraints of time and space
in higher education and enables access on anytime and anywhere basis. ICT provides the
adequate platform to universities and colleges for smooth running of educational
activities and appropriate research (Krishnan, 2008; Schmidt, 2011).Main emphasis of
ICT is on the financial transactions and administrative work done by universities through
the use of internet. With the help of ICT, there is no need to carry the documents by
faculties. The assumption of ICT for education sector is accessibility of resources
throughout the world. Too many efforts have been done by ICT to achieve this target;
still a number of barriers exist across the various parts of the world. Education system is
one of third largest industry in India that suffers due to insufficient funds and lack of
technology. According to Ernst and Young Report (2009) (ALTEN Calsoft Labs, 2012)
on Indian education system, “There are various challenges associated with quality, equity
and access of system. Because of shortage of funds, universities are facing problems in
term of faculty shortage, lack of infrastructure to meet the growing demand and the
enhancement in new technology”. NCAER Survey conducted by Max New York Life
(Edtech Magazine, 2013) stated that current expenditure on higher education in Indian is
nearly INR 46,200 crores. Out of which major expenditure (92%) is done by private
sector and only 8% is done by the public sector (Edtech Magazine, 2013). Education
sector plays a vital role in the development of any country in terms of building the
knowledge-based society, but India education system is restricted to low funds;
universities are forced to back upon the available resources, which results in low quality
of the education system. The present scenario is also under the pressure to fulfil the
competing demands such as deploying applications and delivering web-based student
services at a rapidly accelerating rate without an increase in the budget for hardware and
software. There are various challenges that are faced by the education sector to improve
the quality of education. These can be broadly classified in terms of three impacted
buckets i.e. hardware, software and people/students (CITO Research, 2012; Viega, 2009;
Oslington, 2004).
1.1 Challenges associated with hardware in universities and institutions
Computer systems are no doubt an important asset for any university, and for a better
quality of education, universities must have all the latest hardware resources available in
the market. There are various challenges associated with the hardware as listed below.
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cloud computing in education 207
a Purchase of costly hardware: Due to the limited funds, universities cannot afford
high-end systems and server connectivity for managing IT services on the campus;
shortage of computer hardware has a great impact on IT Services. Even if
universities and institutes go for cheaper hardware resources, it can produce incorrect
results and de-motivate the users (CITO Research, 2012).
b Maintenance and updating of hardware: Because of the day by day technology
changes, one has to keep updating hardware regularly for the smooth running of the
system, e.g., Intel Corporation has launched more than 25 processors in the market in
the past decades. From Pentium III processor to single-core, dual-core, quad-core,
and Intel core processor. It is not possible for any university to have regular up
gradation of processors. So universities and institutes forcefully have to go for AMC
(annual maintenance contract) which is an extra financial burden for the universities
(Kapur, 2012).
c Installation of hardware: Due to the frequent change of technology, new hardware
has to be installed and made compatible with existing hardware and software. To
achieve it, a trained personnel having advent knowledge of new technology needs to
be hired. It needs high finance from the management which is a big issue for the
universities for updating the hardware every time.
d Decreasing life span of hardware: Computer hardware has a very short lifespan of
period i.e. three to four (Yang and Williams, 2008). So expenditure done on
computer hardware is depreciated to almost negligible in three to four years
(Oslington, 2004). One major issue associated with existing hardware is
compatibility with the latest software. Keeping the hardware in warehouses leads to
the problem of e-waste (Babbitt et al., 2009).
1.2 Challenges associated with software in universities and institutes
There are a number of systems in one particular lab in universities and institutes which
require a licensed software’s for every system that attracts the following challenges
(Ketel, 2014).
a Purchase of costly licensed software: For running the IT department in universities
and institutes, we need the licensed copies of application software and system
software on each and every system. This licensed software is very costly and a heavy
burden for universities. It is not possible for small institutes to purchase all software
demanded by the students and faculties.
b Purchase of newer versions: As the technology is changing day by day, new features
are added in existing software to meet the competitive demand. Updating to newer
versions are available for the limited time period by few organisations but later, it
has to be purchased by the universities and institutes. It is not possible for
universities and institutes to update versions of software every time due to the cost
constraint.
c Purchase of antivirus: A lot of viruses are coming to the system through the internet.
For protecting the software and documents from virus attacks, it requires regular
purchasing and updating of anti-virus. In the traditional approach, purchasing of the
same set of antivirus for multiple systems is costly and universities cannot afford this
much cost, so an older version of antivirus are used in the lab which is a risk for the
documents and research work of students.
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1.3 Challenges associated with students in it department
Students are the main entity in educational organisations. Latest versions of software and
hardware of computer systems in labs can make the students’ life easy; but due to the
limitation of software upgrade in universities/colleges, it becomes difficult for the
students to accomplish their task on time and in an accurate manner. The problems faced
by the students are listed below (Sultan, 2010; Alharthi et al., 2015).
a Limited time period and non- availability of the resources: As the institutes timing
are limited, students are forced to use systems within a specified time window for
their work. Moreover, students cannot access the same system on which he/she
works as the same is already taken by someone else.
b Portability: There is a big issue of portability and compatibility in institutes and
universities. Sometimes updating hardware resources in the lab accidentally deletes
all students’ data. Moreover purchasing of new hardware requires old data to be
copied onto the system by the institutes and universities; but due to lack of resources
and advanced technologies, copying whole data on to system is a bigger issue.
c Geographical space: Most of the Indian universities and institutes are using older IT
technologies. In accessing their data, students have to be physically present in the
campus. Restricted work space and time leads to frustration and stops creativity of
the students.
d Compatibility: With the change in technology, new software are coming frequently
in the market. If universities go for these new software, it is not necessary that they
are compatible with the old hardware that in labs. This is a big issue for universities
as they cannot go for purchasing new hardware and software all the time due to
limited funds.
e Computing power: For the creativity and good work, students have to search many
documents on the internet. The processing of these documents on the internet needs
high-end bandwidth which is costly and only limited access to these devices is
available.
f Delay: In a traditional system, procurement process of software and hardware is very
tedious and lengthy. For purchasing any software and hardware requested by
students; it has to go through quotation which is time-consuming and in turns
increase the stress level and delay in the process.
2 Cloud computing
Cloud applications have gained popularity among enterprises due to fast deployment
speed, low upfront cost, flexibility to scale up or down as requirement changes and
on-demand services, etc. (Herbert and Erickson, 2011). Colleges and universities are
always on the lookout to upgrade their hardware and software in order to fascinate
students and speed up the rapid development in digital technologies. Cloud computing
(CC) is a revolutionary step by computing means to achieve the competitive demands for
greater agility, less risk and lower cost for the education sector. With CC, a university can
increase their capacity without compromising on security or heavy investments on
infrastructure for the smooth running of the system. The various US universities
Cost benefit analysis o
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cloud computing in education 209
recognised the potential of CC for improving the cost and efficiency. The University of
California (UC) found CC attractive for their courses like developing and deploying SaaS
application. With the help of AWS, UC was able to move its courses from local system to
the cloud (Li et al., 2009). The researchers at the Medical College of Wisconsin
Biotechnology and Bioengineering Center in Milwaukee used Google’s powerful
cloud-based servers for their research (a very expensive undertaking). According to
Market Research Media (2015), CC market will captures double-digit growth phase – at
about 16.2% CAGR (compound annual growth rate) over the period 2015–2020. Gartner
predicts that infrastructure-as-a-service (IaaS) market will grow at CAGR of 41.3%
through 2016, platform-as-a-service (PaaS) will achieve a 27.7% CAGR through 2016
and software-as-a-service’s (SaaS) will grow by 19.5% over the same forecast period
(CITO Research, 2012).
US educational establishments recognised the potential of CC for increasing the
efficiency and improving the cost. CC can also offer new ways for institutions to explore
up-to-the-minute research opportunities by sharing CC resources with other universities.
The cloud model provides universities the ability to deploy new IT platforms, services,
applications and test environments. Universities can reduce the time to be spent on IT
hardware procurement processes as well as ensures the smooth running of a network with
more agility and efficient manner with the help of CC. According to a survey conducted
by Edtech (2013), universities and colleges are moving toward CC applications for
increasing efficiency, the mobility of system with minimum cost. Universities can
increase the efficiency by 55%, mobility by 49% and cost by 25%. The biggest benefit of
CC is innovation at our desk regardless of the size of an organisation. Small institutes and
universities can enjoy the latest technologies unlike traditional technologies, where it
takes time for new updates and releases. This paper is focused on return of investment
(ROI) model for calculating the total cost of investment (TCO) while migrating to cloud
architecture. Cloud basically has three delivery models (SaaS, PaaS, IaaS) based on pay-
per-used model. These models remove the need for installing and running of software,
applications on the client system. Cloud’s SaaS model provides the software’s that
represents the 25% of the global market, especially in IT management, CRM and security
software. SaaS provides the licensed software at very low cost (pay as you go) with
attractive use interface (Jäätmaa, 2010). PaaS provides the virtual platform which
includes the servers, OS and development platform as a service over the internet for the
developer to build applications. IaaS includes the servers, processing power and storage
which assist in reducing the upfront cost and benefited for small scale companies
(Broberg et al., 2008; KPMG, 2012).
The pattern of educational CC has been adopted by numerous IT organisations.
Microsoft, Google, Amazon and IBM have given much activity to bolster education
institutions with the vital learning devices. Some of these activities are free with no cost.
With the accessibility of substance on the web, it is unnecessarily for faculties to print
teaching materials. These days, understudies have the decision to get to homework
assignments, lesson notes, and different materials online with the cloud. A portion of the
main cloud services in advanced education are portrayed beneath (Mathew, 2012).
1 Microsoft Education Cloud: It has been effectively creating instructive cloud
services, for example, Microsoft Office 365. It furnishes schools with free email, a
site with altering and storeroom, texting, web conferencing, and 25 GB of individual
stockpiling (Geater, 2014). Besides, understudies and staff can utilise any program to
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make reports utilising Microsoft Office (Weldon, 2013). The drawback to Microsoft
365 is the expense. While a free alternative is accessible (with a marked contract), a
per user regularly scheduled instalment is required to get to elements, for example,
Office Mobile, Office applications for PC or Mac, boundless email stockpiling and
phone message. Additionally disturbing is Microsoft’s failure to guarantee 99.9%
uptime without regularly scheduled instalment (Geater, 2014; Kline, n.d.).
2 Earth Browser: Earth Browser is a virtual globe programming created by Lunar
programming software. It is accessible online as a flash application or be introduced
locally as an application (EarthBrowser, 2015). It concentrates mainly on picturing
geophysical data, for example, climate, quakes, and so forth. It demonstrates the
earth as satellite pictures. Earth Browser can be utilised as a part of continuous. It
consistently redesigns data (EarthBrowser, 2015). The representation of the earth is
rendered alongside huge information which is said to be exact. The item can likewise
be pivoted and zoomed to a given separation.
3 IBM Cloud Academy: IBM Cloud Institute is a synergistic group of pioneers in
training. It is proposed for instructive foundations, with an objective to decrease
costs and improve administrations while making data accessible, and secure if
necessary (Wyld, 2013). It can likewise be utilised to merge assets, enhance
understudy achievement, and quicken investigative revelations. On the
administration part, it is required to include regulatory efficiencies and ration assets.
These are known as how the cloud can help instructive foundations to give
administrations. They are effectively coordinating cloud advancements into their
basic infrastructure to share best practices in the utilisation of mists and to team up
with accomplices to make imaginative cloud advances and models (Wyld, 2013).
4 Google Apps for Education: It is a standout amongst the most utilised applications as
it does not include actual cost (Geater, 2014). It is free with no concealed expenses.
A portion of the component incorporate cloud email, 30GB of capacity, facilitating,
word preparing and joint effort apparatuses Google is Microsoft’s most grounded
rival. On the off chance that it is contrasted with Microsoft’s Office Suite, there is a
current commonality with a large number of Google’s items, for example, Gmail,
Chat, and Calendar. All things considered, the fundamental disadvantage is that it
obliges clients to have (or make) a Google account. It is mandatory for a client of age
13 years of age and beneath to get guardian consent (Wyld, 2013).
3 Cloud cost factors while analysing ROI
Main driving factors of CC are its simplification, economics, convenience and the hassle
free services (Erdogmus, 2009). Too many organisations feel colossal capability of the
innovation in diminishing the expense of IT to organisations and freeing them from the
expense and hassle of having to install and maintain applications locally (Leavitt, 2009).
Providing IT services in the cloud shifts much of this expense to a pay-as-you-go model
and hence offers remarkable cost advantages according to one view (Lin et al., 2009).
Cloud changes the nature of many traditional factors of cost saving. Following are the list
of factors considered while calculating the cloud cost (Viega, 2009).
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cloud computing in education 211
• Hardware and infrastructure: Cloud’s main advantage lies with its resource
management and server consolidation. While calculating the cost of organisation, we
should also consider the cost of data centre space, networking cost and power
andcooling cost. By implementing cloud, we can reduce this cost from TCO. For
universities, we can go for hybrid and public cloud options as these clouds involves
more extensive wide-area networking than that of private clouds (Viega, 2009).
• Budget and billing arrangements: Many cloud providers gives flexible billing and
service-usage metering. Because of these facilities, it is now easy for IT
organisations to calculate the cost of the utility resources which earlier they could not
calculate. It provides a greater help to manager in forecasting their budgets
effectively (Lin et al., 2009).
• Long-term strategy: Cloud’s promise to compute flexibility and scalability that can
enhance the company’s way to develop successful products and services. These are
not easy to evaluate and compute but need to be considered as part of the equation
(Mathew, 2012).
• Economies of scale: By adopting CC, we benefits from the economies of scale. The
cloud vendors provide savings for all the clients by housing multiple clients’
computing assets in highly scalable and large data centres.
• Reduced data centre capital expenses: Cloud reduces the capital expense of the
organisation. As there is no upfront cost for building a data centre like land
acquisition, design construction for a new organisation. So with the help of cloud any
one wish to open new organisation can avoid building or at least defer expanding of
his data centre.
• Reduced data centre operational expense: For calculating TCO, we have to include
various factors like operating cost of data centre, electricity bills, employees and
security guards etc. But all these cost can be save by opting cloud. Again, the
economies of the economies of scale that originate from shared premises imply that
operating costs borne by the cloud provider are amortised across a large client base
(Leavitt, 2009).
• Reduced disaster recovery risk: Cloud reduces the risk for DR which itself is big
issue for organisations. Cloud providers make so many backup policies, redundant
data centres to protect the client data during DR. Additionally; we can further reduce
risks by retaining more than one cloud provider for our most critical applications
(Viega, 2009).
3.1 Cloud adoption factors with respect to ROI
CC introduces new factors into the ROI equation that require thinking outside the box of
licensing software capital acquirement and depreciation:
1 Paying only for what you use: As per cloud model ‘pay only for what you use’. With
the help of CC, we can increase and decrease the cost according to our requirements.
Moving from CAPEX to OPEX means: moving the company’s capital expenditures
(CAPEX) on operating expenditures (OPEX) for computing assets. CAPEX includes
the full cost of the asset from the very first day but the expense of that asset is
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depreciated over time whereas in OPEX expense can be deducted in the whole year
(Bezemer et al., 2010).
2 New levels of transparency into cost and computing resource use: Cloud provides us
the exact details of the cost associated with your work like how many CPUs have
been used to support each application, power costing for the same etc. with this
information we can manage our applications in better way and can think about the
new applications for development of business (Viega, 2009); Erdogmus, 2009).
3 Increased control and automation: By switching to the cloud we can have greater
benefits and control over our resources. We can increase and decrease the computing
powers of our application by implementing rules we have set .you can instantly gain
benefits from greater control and precision over your resources (Leavitt, 2009;
Viega, 2009).
4 Open stack and the open cloud: The first generation of the cloud is totally
dominating by Amazon web services. So in that generation, if the user is not aware
and careful than he can be trapped into particular vendor and can lose option but now
open stack co-founded by Rack space makes cloud infrastructure and software as
open source. Several companies like IBM, HP, Dell, Wipro etc have been committed
to building clouds using open stack while these vendors will compete on levels of
service. Now the clients have the option to avoid the lock-in condition as cloud
software executes in the same manner in each and every cloud software
(Viega, 2009; Lin et al., 2009).
4 Adoption of CC in education sector with financial aspect
World’s top universities like Washington State University’s School of Computer Science
and Electrical Engineering , University of California, higher education institutions from
UK, Africa, and many others are recognising the efficiency and benefits of CC (ALTEN
Calsoft Labs, 2012). Many examples for adoptions of cloud in the university can be seen
nowadays. E.g. in Commonwealth, many colleges, and universities had collaborated for
the formation of Virginia Virtual Computing Lab (Herbert and Erickson, 2011). This
allowed the university to reduce the cost by reducing IT expenses (by reducing the
necessities of licensing and software updating) and to maintain its own data centres.
Another example is North Carolina State University which adopts the cloud
technology and reduces its expense to one-third (Herbert and Erickson, 2011). So the
financial benefits allow the universities to adopt for CC services. The benefits of CC can
be measured in the form of tangible (quantifiable) and intangible (strategic). The
incurring cost of deployment of CC can be categorised as upfront cost, operational cost
also known as annual/ recurring cost and termination cost (Herbert and Erickson, 2011).
The different metrics used to measure the costs and estimate the return during the lifetime
span of cloud investment are return on investment (ROI), total cost ownership (TCO), net
present value (NPV), internal rate of return (IRR) and payback period.
4.1 Cost mechanism used on CC
The main building block for any system with respect to financial aspect is cost structure.
The various financial tools used by cost model are following.
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cloud computing in education 213
4.1.1 Cloud ROI
ROI is a tool for measuring the efficiency of any investment. For calculating ROI, we
require the initial cost of the project, the investment done, the cost savings done owing to
the new investment (4). If the ratio is greater than 0, means the return is greater than the
cost so the investment may be considered beneficial (ISACA, 2012; Schmidt, 2011).
()/
()/
ROI initial cost Final cost Investment investment
cost saved investment investment
=−−
=− (1)
For calculating the ROI of CC, we should first understand the cost of initial investment
and savings. No upfront capital cost is required to migrate on the cloud environment. So
commencing on the cloud can be as easy as browsing through a catalogue of products
available on web portals, inserting them to a shopping cart and processing the order. As
soon as the order is approved by an administrator, the rest of the things are done by cloud
itself (Broberg et al., 2008). The cost of utilising the cloud services is totally operational
in nature. Hence the investment is either monthly basis or yearly basis using the
pay-per-use model of the CC. The starting cost of the project is the total cost of
ownership (TCO) keeping up one’s own particular data centre before utilising cloud
services. Saving cost would be the withdrawal of entire data centre cost (in the case of
complete migration) or the reduction in data centre cost (in the case of partial migration)
(Veit and Gentzsch, 2008). However, the economics of CC does not stop here.
Associated advantages of CC such as massive scalability, the flexibility of service, the
elasticity of resources, and latest technology contributing, add to the profitability of the
enterprise cloud (Broberg et al., 2008).
()( )Tangible Intangible benefits Upfront Cost Recurring Cost Termination
ROI
Upfront Cost Recurring Cost Termination Cost
+−++
=
++ (2)
where tangible benefits are the cost difference between cloud and on-premise
applications and intangible benefits are those that can be quantified. In CC, intangible
benefits can be measured by listing out the intangible benefits of cloud applications with
weight age and rank. Intangible benefits vary from client to client based on their
requirement.
4.1.2 Cloud TCO
The cost of ownership analysis is intended to uncover the lifetime costs of acquiring,
operating and maintaining services or assets. For the classification of cost two types of
cost components, i.e. direct and indirect cost has been used. The direct cost includes
Server, hardware, network, storage, electricity usage etc. Whereas indirect cost includes
the rack, shared and storage cost, salary of employees, performance changes, lighting,
cooling etc. TCO is helpful to determine the difference between the purchasing price and
the long-term cost of investment (Broberg et al., 2008).
TCO Upfront Cost Recurring Cost Termination Co
s
t=+ + (3)
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4.2 Financial aspects of CC
Cloud applications are fundamental for business improvement without gigantic IT
investment. Its subscription based model raises addressing of its long financial impact.
The assessment of financial impact is a key to choose the cloud reception or shirking.
There might be applications that may demonstrate excessively costly, making it
impossible to keep running in the cloud. Tables 1 to 3 depict the factors according to the
upfront cost, recurring cost and termination cost (Jäätmaa, 2010; El Emam, 2005;
ISACA, 2012; Herbert and Erickson, 2011).
Table 1 Upfront cost of cloud application
Cost head Description
Technical readiness It is the cost associated with the investment in bandwidth and
good internet connection with the basic necessity to integrate the
cloud services.
Implementation It includes the cost of professional services required for
managing the transition to the cloud.
Integration It includes the cost of professional services required for
migrating from in house to the cloud.
Configuration/customisation It includes the cost for the client based configuration or
customisation for cloud’s applications.
Training It includes the cost for training IT professionals to manage and
handle the cloud vendors.
Organisational change It is a process that may require some re-engineering to
accommodate the cloud application specific needs like change
management, user access provisioning, and resource utilisation
monitoring and internal audits.
Table 2 Recurring cost of cloud application
Cost head Description
Subscription It includes the agreed-on periodic fees for the utilisation of cloud
services on monthly, quarterly or yearly basis.
Change management It includes the cost for the change management process and the
cost incurred when requesting system changes.
Vendor management It is the cost associated with monitoring of cloud service provider
(CSP), SLAs monitoring, contract management and enforcement.
Cloud co-ordination Cost for managing the cloud services of different providers. This
gets included in the cost only if the consumer uses the services of
different cloud providers.
Risk mitigation It includes the cost to be implemented to control the risk
introduced by the cloud adoption.
Downsize/upsize It is the extra cost charged by the vendors for downsizing or
upsizing computing resources.
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Table 3 Termination
Cost head Description
Revert back
to on-premise
application or
changing the
provider
The organisation can change their cloud service provider due to any reasons
like new rules and regulations, financial/economical problems. Few of possible
cost are listed below.
• Extracting data from the cloud applications and verifying their accuracy and
completeness
• Penalties of early termination
• Reallocation of IT resources to support the reverted services
• Cost to clean the data from cloud storage and processing hardware
• Configuration cost to replace the cloud service
5 Cost analysis of ‘on-premise’ vs. ‘cloud’ computing: a case study
An example of a university has been taken to illustrate the cost benefit analysis.
Requirement analysis
A university in NCR wants to setup a new Lab for its students with following
requirement of
a 20 computers of core2 processor with Windows 7 OS
b two server of IBM32 (Zeon based; primary and secondary) having capacity of 1 TB
c software like SQL Server, .NET, MS office
d Ruckus Wifi controller (25 pts)
e one network access storage (NAS) of 1 TB
f one online UPS of 20 KVA
g one switch of HP.
A LAN has to be setup among the system for communication. Lab should have internet
connection of at least 8MBPS for good internet speed. One printer of HP Deskjet Ink
Advantage (3545-e) is also required. The comparative cost analysis of above setup and a
cloud solution for the same is given below in a table.
Table 4 Upfront costs
On-premises AWS cloud-based
Configuration Cost Configuration Cost
Technical readiness Technical readiness
Network start-up cost
(2Hub + RJ45(20) + Cables)
7,900 (5,000 + 400 +
2,500)
Network start-up cost NIL
HP switch 20,000 (20,000*1) HP switch NIL
Online UPS (20KVA) 110,000 (1,10,000*1) Online UPS (20KVA) NIL
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Table 4 Upfront costs (continued)
On-premises AWS cloud-based
Configuration Cost Configuration Cost
Technical readiness Technical readiness
Power and cooling (Voltas
Spilt AC)
84,000 (42,000*2) Power and cooling
(Voltas Spilt AC)
42,000
(42,000*1)
Antivirus (security) 24,000 (1200*20) Antivirus (security) NIL
HP Deskjet 25,000 (25,000*1) HP Deskjet 25,000
(25,000*1)
Rackus Wifi controller
(25 pts)
175,000 Rackus Wifi controller
(25 pts)
175,000
Wifi access point 45,000 (22,500*2) Wifi access point 45,000
(22,500*2)
Software(SQL Server
(5instance), NET (5instance),
MS Office (20 instances)
(Campus agreement discount)
360,000 (100,000 +
200,000 + 60,000)
Software SQLserver
(5instance), NET
(5instance), MS Office
(20 instances)
(11,675*12) +
(4,883*12) +
(19,535*12) =
140,100 +
58,596 +
23,220 =
221,916
Windows OS7 (clients) 14,000 (7000*2) Windows OS7
(including in server
cost)
NIL
Windows server 2012
(for server)
3000 (30000*1) Windows server 2012 66*12 = 792
Configuration/customisation Configuration/customisation
20 Core2 Duo processor 50,0000 (25000*20) 20 computers of 250 GB
capacity each
2,40,000
(12,000*20)
Server with 1TB 1,20,000 (60000*2) Server (including OS,
processor, RAM, HDD)
$175
($14.64*12) =
11,675 (INR)
Implementation/integration Implementation/integration
Installing. migration cost 20,000 Installing migration cost NIL
Total 742,900 Total 124,467
Difference 618,433
Table 5 Recurring costs
On-premises AWS cloud-based
Configuration Cost Configuration Cost
Subscription Subscription
Support (AMC) 50,000 Support (AMC) NIL
Software (SQL
server, .NET, MS
office)*campus
agreement
360,000 (100,000 +
200,000 + 60,000)
Software (SQL server,
.NET, MS office)
(11,675*12)+(4,883*12)
+ (19,535*12) = 140,100
+ 58,596 + 23,220 =
221,916
Cost benefit analysis o
f
cloud computing in education 217
Table 5 Recurring costs (continued)
On-premises AWS cloud-based
Configuration Cost Configuration Cost
Subscription Subscription
Electricity bill 120,000
(10,000*12)
Electricity bill 84,000 (7,000*12)
Internet charges
(quarterly charges*4)
400,000
(100,000*4)
Internet charges
(quarterly charges*4)
600,000 (150,000*4)
Vendor management Vendor management
Employee salary
(for two employees)
480,000
(40,000*12)
Employee salary
(for two employees)
NIL
Total 1,410,000 Total 905,916
Difference 504,084
Table 6 Termination cost
On-premise AWS cloud-based
Unplanned repair cost(due to
rules and regulations,
penalties of early
termination, reallocation of
IT resources)
12,000 (1000*12) NIL
Cost analysis of one year
TCO Upfront Cost Recurring Cost Termination Co
s
t=+ +
12 (742, 900 1, 480, 000 12,000) 2, 234,900TCO of On premise for months
=
++= (4)
12 (124, 467 905,916 0) 1 ,030,383TCO of CC for months
=
++= (5)
12 = 1,204,517Total savings for months (6)
Cost analysis of three years
(
)
(
)
(
)
*3 *3TCO Upfront Cost One time Yearly Recurring Cost Termination Cost=+ +
36 (742, 900 4, 440,000 36,000) 5, 218, 900TCO of On premise for months
=
++= (7)
(
)
36 642, 250 (1,059,684 * 3) 0* 3 3,821,302TCO of CC for months =+ += (8)
36 397,598Total savings for months
=
(9)
From the above cost comparisons, CC has seen the beneficial on-premise setup. If we
check according to all the different parameters (upfront cost, recurring cost, termination
cost) of TCO, CC is the only model that can benefit the universities to increase its
growth. After opting for CC, we can see the tremendous saving for a university because
of less recurring cost and less upfront cost.
218
K
.B. Nayar and V. Kuma
r
6 Challenges in CC implementation
In spite of the adaptability, versatility, on demand and effective recourses of CC offers
the higher education organisations; there is a low rate reception of CC in advanced
education foundations as indicated by Gartner assessment. Gartner specified that only 4%
education sector is using the cloud services. Another study highlights that 12% of the
members are not acquainted with CC services although 88% of them concur that CC
education services must be misused in the schools (Alzain et al., 2013). The advanced
education establishments confront a few difficulties that hinder adopting CC discussed
below.
a Security: There are a few concerns encompassing the usage of security in CC and
one of them is data protection. The clients do not have control or know where their
data is being put away (Chou and Oetting, 2011).
b Control: The measure of control that the client has over the cloud environment
changes (Chou and Oetting, 2011).
c Integration within house IT and customisability: College IT executives typically
utilise their own in-house applications with an impressive portion that is modified to
their own particular lab structure. The worry is the move of such in-house
applications to the cloud environment and the amount of the adaptability will be lost
in that procedure (Ludwig et al., n.d).
d Performance and availability: The next big concerns of researchers are how to
ensure such performance from an outside vendor. Availability of services is another
related concern as far as the likelihood of massive vendor outages. This is
particularly valid since it might affect understudy learning or the convenient
conveyance of the exploration results, which are regularly fixing to strict timelines
(Keeton et al., 2010).
e Interoperability: An all-inclusive arrangement of benchmarks and interfaces has not
yet been characterised, bringing about a noteworthy danger of vendor lock-in
(AlZain et al., 2013).
f Reliability: Numerous current cloud bases influence item equipment that is known to
fail unexpectedly (Buyya et al., 2009).
g Cost: It is another element that might be presented by extra vendor relationship
management or potentially extra measures that are one of a kind to CC
(Greenberg et al., 2008; Wood et al., 2011).
7 Conclusions
CC gives a new perspective to the education sector in terms of cost-benefit analysis and
introduces various parameters, which can influence universities to adopt this technology.
So, by adopting these parameters, education sector relieve itself from the complex IT
infrastructure as well as maintenance cost of the same. CC is beneficial for the education
system in many aspects, considering the economic situation of educational institutions
across the world. However, there are a significant number of challenges associated with
Cost benefit analysis o
f
cloud computing in education 219
the cloud adoption along with the benefits. Present work can serve as a good analysis tool
for the educational institutions while looking for a migration to the cloud services.
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