The Economics of Federal Government Cloud Computing Analyzed

[From Slashdot. I would argue that "green" clouds using follow the
wind/follow the sun architectures would have even more dramatic
savings as documented in recent MIT and Rutgers papers--BSA]

http://it.slashdot.org/story/09/10/19/0053207/The-Economics-of-Federal-Cloud-Computing-Analyzed

"With the federal government about to spend $20B on IT
infrastructure, this highly analytical article by two Booz Allen
Hamilton associates makes it clear that cloud computing has now
received full executive backing and offers clear opportunities for
agencies to significantly reduce their growing expenditures for data
centers and IT hardware. From the article: 'A few agencies are already
moving quickly to explore cloud computing solutions and are even
redirecting existing funds to begin implementations... Agencies should
identify the aspects of their current IT workload that can be
transitioned to the cloud in the near term to yield "early wins" to
help build momentum and support for the migration to cloud
computing.'"

http://govcloud.ulitzer.com/node/1147473

/"Of the investments that will involve up-front costs to be recouped
in outyear savings, cloud-computing is a prime case in point. The
Federal Government will transform its Information Technology
Infrastructure by virtualizing data centers, consolidating data
centers and operations, and ultimately adopting a cloud-computing
business model. Initial pilots conducted in collaboration with Federal
agencies will serve as test beds to demonstrate capabilities,
including appropriate security and privacy protection at or exceeding
current best practices, developing standards, gathering data, and
benchmarking costs and performance. The pilots will evolve into
migrations of major agency capabilities from agency computing
platforms to base agency IT processes and data in the cloud. Expected
savings in the outyears, as more agencies reduce their costs of
hosting systems in their own data centers, should be many times the
original investment in this area." [2]/

The language in the budget makes three key points: (1) up-front
investment will be made in cloud computing, (2) long-term savings are
expected, and (3) the savings are expected to be significantly greater
than the investment costs.

Booz Allen Hamilton has created a detailed cost model that can create
life-cycle cost (LCC) estimates of public, private, and hybrid clouds.
We used this model, and our extensive experience in economic analysis
of IT programs, to arrive at a first-order estimate of each of the
three key points in the President's budget.

Most Internet traffic bypasses tier-one networks

[Once again the world's R&E networks have been at the forefront of this revolution. Most R&E networks around the world arrange for direct peering with major content providers and Tier 2 networks. This saves anywhere from 40-50% of Internet transit costs for their customers and is also a major, if not primary source of income for most R&E networks. Some R&E networks are now talking about exchanging their respective peering routes to create a global Tier 1 peering consortium which will further reduce costs for their connected institutions. Of course, this is only possible if you have an extensive optical backbone with lots of capacity to add wavelengths etc - another example of how the optical revolution is changing the market dynamics of the Internet. CANARIE's UCLP was originally designed for this scenario to enable R&E networks and institutions to do low cost remote peering. From a posting on Dewayne Hendricks list -- BSA]

From: (Dewayne Hendricks)


Study: Most Internet traffic bypasses tier-one networks
Telephony Online
By Ed Gubbins

The majority of Internet traffic now goes through direct peers and
does not flow through incumbent tier-one telecom networks, according
to a recent report from Arbor Networks, which sells network management
and security products.

Tier-one incumbents were once the chief providers of connectivity
between content companies like Google and local or regional broadband
providers like Comcast. But over time, Google and other content
providers have built out their own infrastructure, connecting more
directly to end users and bypassing those tier-one intermediaries.


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