Virtualisation and Cloud Computing

Running head: VIRTUALISATION AND CLOUD COMPUTING
VIRTUALISATION AND CLOUD COMPUTING
Name of the Student:
Name of the University:
Author Note:

2VIRTUALISATION AND CLOUD COMPUTING
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
The IT crowd..........................................................................................................................3
The IT infrastructure and hardware........................................................................................4
The location and the physical space.......................................................................................5
The power requirements and electricity.................................................................................5
The data backup and insurance costs.....................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8
Appendix..................................................................................................................................10

3VIRTUALISATION AND CLOUD COMPUTING
Introduction
The chief financial officer of any company in Turkey before investing money in the IT
department should sit with the company’s IT team and the chief technological officer to
discuss the probable cost of the IT infrastructure and compare it to a cloud based alternative.
This report focusses on comparing of the IT infrastructure investment cost and the cloud
based infrastructure costs and reports which one is a better choice. The report will also
discuss about the costs of hardware in Turkey and compare it with the cost of web based
services in Turkey. Implementing a cloud based architecture in a company also depends on
the host country’s cloud or network infrastructure.
The company that is being discussed in this report is a small to medium enterprise
consisting of 100 employees and 20 servers. Five of these servers are being used for online
purchasing system application and the rest is used for other purposes like Authentication,
DNS, Web, DHCP and FTP. The main sections that increases the cost are the energy needs of
the company, the server and devices hardware costs, the staffs, insurances and the cooling
cost.
Discussion
In the following section, the report will discuss about the various factors that will add to the
IT company expenditure.
The IT crowd
The main expenditure for an IT company comes from its biggest assets, which is its
employees. The IT department employees are the key members of the IT department. Their
sole job is to keep the company’s organization infrastructure maintained. Each employee
needs additional hardware to work which brings in extra costs. The skills of the employees

4VIRTUALISATION AND CLOUD COMPUTING
are needed to operate complex IT applications and servers. The company being looked at it
this report has around 100 employees. They are an indispensable part of the IT Company.
The main section of an IT company is taken by employees who are assigned towards the
maintenance of the infrastructure. The average salary of a software engineer in Turkey is
$24000. For the 100 employees, the expenditure to the company would be 24000*100 or
$2400000. Out of that, the amount spent on the 8 admins needed for the maintenance of the
20 servers would be 24000*8 or $192000. The 8 admin staffs are calculated as follows: 3 for
the online application servers, 1 for the DNS server, 1 for the authentication server, 1 for FTP
server, 1 for web server and 1 for DHCP server. The allotment is based on the most
commonly used admin distribution system in Turkey for a small to medium enterprise.
This cost can be reduced if the entire infrastructure is shifted from hardware based to
cloud based. This will shift the maintenance task to an outsourced cloud service provider. The
average amount charged by a cloud based company for the same job is $72000 annually. This
has been calculated based on the average outsourced maintenance rate of $300 per server per
month in Turkey. So, 300*20 servers *12 months or $72000.
The IT infrastructure and hardware
The IT infrastructure cost is quite huge. The SME we are looking at is an enterprise
with around 20 servers. The other hardware are also included when estimating this section of
the expenditure. The servers are quite costly to purchase. So the initial investment cost comes
quite high just for the hardware. But this is not the end. The maintenance cost of maintaining
these hardware are even higher. Replacing one or two defunct servers brings a sudden
expenditure on the company budget. Each server costs around $2000, so 20 servers would
cost around $40000. Together with the maintenance cost of average $7000 dollars per month,
the total expenditure comes to around $124000.