For many organizations, the benefits of cloud adoption are clear. A move to the cloud allows customers to focus on application innovation without the complexity of building and maintaining underlying infrastructure, while removing the need to perform many IT tasks like patching, networking, and server management. As a result, more and more enterprises are migrating their core business applications to the cloud. In fact, most have moved beyond the conversation of “why cloud?” to “which cloud provider?” - and as with most business decisions, the answer can be the result of a simple exercise in ROI.
With that in mind, Microsoft recently commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study to examine the potential return on investment (ROI) enterprises may realize by shifting their application development and deployment to Azure platform-as-a-service (PaaS). The purpose of this study is to give readers a framework to evaluate the potential financial impact, or ROI, of leveraging Azure PaaS for their organizations. This ROI represents benefits gained by customers that moved from infrastructure-as-a-service (IaaS) to platform-as-a-service (PaaS). Noteworthy: For customers migrating from on-premises environments to cloud, the return on investment can be even greater.
Forrester Study on Azure Cloud
To better understand the benefits, costs, and risks associated with an Azure cloud implementation, Forrester interviewed eight customers that had several years of experience with Azure IaaS and had more recently adopted Azure PaaS.
With Azure PaaS, customers were able to streamline and automate processes across key functions and lines of business, enabling them to meet their objectives, keep costs in check, and increase revenue. They also said that the ease of development and management meant more applications were created and updated, providing greater value to the organizations and their customers. The strategist and founder of a US IT services firm said: “Developing our app without PaaS? Well, we wouldn’t have done it. Frankly, the extra time and resources required would have wiped out any profit that we have generated.”
Forrester created a representative organization based on the composite results of the interviews with the customer organizations: a medium-size business with 100 applications now supported by Azure PaaS (and more planned each year).
Key Finding: Azure Helps Improve Time to Market and Reduces Management Time
Interviews with existing Azure PaaS customers and subsequent financial analysis found that the representative organization based on these organizations experienced the risk-adjusted ROI, benefits, and costs shown in Figure 1.1 See Appendix A for a description of the representative organization.
The representative organization five-year analysis estimates a 466% ROI and a net present value (NPV) of more than $5.9 million. Key improvements enabled by Azure PaaS include an 80% reduction in IT administration time required to manage apps deployed on the platform, a 25-hour average reduction in development and testing time required to develop or update Azure PaaS applications, and a 50% reduction in time required to help deploy a new application solution to a client.
Benefits of Azure Adoption
The representative organization, based on current Azure customers, saw the following risk-adjusted benefits:
• Eighty percent less IT administration time was required for applications on PaaS, allowing the organization to focus on application innovation, not administrative tasks. The organization used to spend significant time on server patching, networking setup, firewall configuration, and many other server-related tasks now included with Azure PaaS. This adds up to $132,240 saved in the first year.
• IT teams can reallocate or avoid hiring five IT administrators and two database administrators (DBAs) to other teams or more value-added tasks, adding up to $697,000 saved per year. The organization would have needed to hire five new IT administrators and two DBAs within the first year to meet the demand and service otherwise enabled by Azure PaaS.
• The organization improved application delivery time-to-market by 50% with Azure PaaS, leading to $376,441 in increased profit in the first year. The organization could deliver applications running on Azure in half the time, meaning revenue could be earned more quickly.
• The organization saved 25 hours in application testing and development time per application created or updated, improving developer productivity and adding up to $108,458 saved in the first year. With Azure PaaS, developers can take advantage of integrated tools and, with the push of a button, testers can create new testing environments that exactly match the organization’s development and production environments.
• The organization saw $98,550 in employee issue identification and repair resource cost savings in the first year. The representative organization deployed an employee-facing mobile application on Azure PaaS to meet a specific need related to facilities issue identification and repair, saving significant time and resource costs compared with the earlier paper-based processes.
• The organization deployed customer-facing applications, leading to $168,750 in the first year in new profit from improved sales rep performance and direct customer sales. Both customer self-service and sales enablement apps are easier to develop and contribute to new revenue and profit for the organization.
Cost Savings with Azure
The representative organization experienced the following risk-adjusted costs:
• Initial implementation costs of $101,850 and ongoing resource and other costs related to Azure PaaS of $73,500 in the first year. While significant administration, development, and testing costs can be saved with Azure PaaS, some implementation, training, and management costs are expected.
• Azure subscription and support fees of $191,400 in the first year. These are the estimated annual fees the representative organization paid to Microsoft for Azure PaaS services, billed monthly on a per-use basis.
Download the full Forrester report here.
HSO: The Clear Choice to Manage Your Cloud
New technology is enabling new business models at a much faster rate than ever before. To be successful, companies need to equip their people with the right tools and processes to capture new revenue streams- and the cloud is a key driver influencing those opportunities. Ninety percent of Fortune 500 companies trust Microsoft Azure, and so can you.
See why Microsoft sets the bar for scale and performance and HSO is your best bet to carry business critical operations to the cloud. Join our webinar on August 8 to find out how you can embrace all the benefits of taking your business to the Microsoft cloud, and learn how HSO's Managed Services can help keep it running on pace with your business.