Nokia analysis demonstrates significant financial benefits for large enterprises moving to a private cloud from a legacy IT e...
January 24 2017 - 9:11AM
- Enterprise Private Cloud Total Cost of Ownership (TCO) model
forecasts a minimum of 25 percent savings - over five years - on
overall IT costs for large enterprises that adopt a private cloud
versus a legacy IT environment; break-even in less than three
years
- Analysis applies to OpenStack®-based private clouds, coupled
with software defined networking (SDN) technology and built with
off-the-shelf components from a range of vendors
- Nokia offering a custom analysis free of charge for large
enterprises from now until June 30, 2017
24 January 2016
Espoo, Finland - 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, according to a financial
analysis conducted by Nokia. The analysis, known as the 'Nokia
Enterprise Private Cloud TCO Model' - the first of its kind in the
industry - also demonstrates that enterprises can expect to break
even on their private cloud investment in less than three
years.
Advocates of enterprises moving to private cloud have typically
focused on the operational and business benefits that this approach
can offer, in terms of flexibility, agility and the ability to
scale quickly. The analysis underlying the Enterprise Private Cloud
TCO Model is among the first available in the market that
exclusively explores the question that is most critical to IT
managers - what are the cost benefits of this move? 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 utilizes off-the-shelf components and is less expensive.
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. More
specifically, the analysis takes the overall operational budget of
the enterprise data center (eliminating costs that will be largely
the same in either scenario such as facilities costs - power, rent,
air conditioning/heating), and then provides a high-level breakout
by the software or operational tasks performed. The breakout was
then used to calculate potential cost impacts - both increases and
decreases - for a cloud environment.
Nokia's financial 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 including
OpenStack® cloud management software. 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. As a result, it also
assumes a deployment strategy that would minimize changes to
day-to-day IT operations.
Leading industry analyst firm IDC validated the model overall,
including the ranges of potential increased and decreased costs by
category.
Randy Perry, Vice President, 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."
Mike Loomis, head of the large enterprise segment at Nokia,
said: "The Private Cloud TCO Model we are introducing today is
an industry first. Most advocates for the deployment of a private
or hybrid cloud in large enterprises focus their arguments on the
benefits offered by a cloud approach, be it faster deployment times
for new applications, a more flexible approach to deploying and
managing their resources and similar claims. While these claims in
many cases are legitimate, our model differs by addressing 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."
Lauren Sell, Vice President Marketing and Community Services,
OpenStack Foundation, said: "More and more enterprises are
embracing OpenStack-powered private clouds for their performance
advantages and their cost savings - both over public clouds and
proprietary private clouds. The Private Cloud TCO Model developed
by Nokia is the latest example of OpenStack community members
creating valuable and validated tools that can help enterprises as
they plan and execute their strategies for agile, open cloud."
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. Therefore the overall 25 percent cost
savings can be considered a minimum baseline - actual savings in
practice would likely be considerably higher.
Today, the Nokia Enterprise Private Cloud TCO Model offers a
generic analysis of likely cost savings for large enterprises. For
enterprises that are interested, it can quickly be modified to
incorporate a particular enterprise's data and deliver not only a
custom savings but also a budgeting estimate by cost category.
Nokia will perform such analysis tasks without charge for large
enterprises from now until June 30, 2017.
Resources:
- Nokia OpenStack solutions page
- Nokia Private Cloud TCO Model InfoGraphic
- Nokia Private Cloud TCO Model Video
- White Paper: Stairway to Cloud: 9-Step Blueprint to a Best
Practices Private Hybrid Cloud for your Enterprise
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About Nokia
Nokia is a global leader in creating the technologies at the
heart of our connected world. Powered by the research and
innovation of Nokia Bell Labs, we serve communications service
providers, governments, large enterprises and consumers, with the
industry's most complete, end-to-end portfolio of products,
services and licensing.
From the enabling infrastructure for 5G and the Internet of
Things, to emerging applications in virtual reality and digital
health, we are shaping the future of technology to transform the
human experience. www.nokia.com
Media Enquiries:
CommunicationsPhone: +358 (0) 10 448 4900E-mail:
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