W5_ISHAQ_Applying Life_Cycle_Cost_for_Hosting_Service

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Problem Definition

We are working to procure a Market Management System (MMS) for Oman electricity market. Once the development is completed by the vendor, we will be looking for a place to host the system hardware. In may last blog (W4), I applied the MADM analysis. In this blog, I will apply the total life cycle cost analysis (LLCA) method to see if it supports MADM outcome. LLCA is a tool that helps make logical business decisions by estimating the overall costs of project alternatives and to select the service that ensures the lowest overall cost of ownership. It tracks and accumulates all costs and revenues attributable to cost object from its invention to its disposing.
Development of Feasible Alternatives
There are three feasible alternatives for hosting the MMS:
  1. The company premise data center
  2. Renting a co-location service from a hosting company
  3. Hosting the system in the cloud (e.g.: Google)

Development of the Outcome for Alternative

Mainly there are two types of attributes to be considered for calculating the life cycle cost which are acquisition costs and support costs that includes operations and maintenance. So, for this blog, the following list of attributes are considered:
  • Design and construction cost (Acquisition Cost)
  • Labor cost
  • Power cost
  • Support and maintenance cost
  • Rent cost
  • Securing and protecting the devices cost

Selection of Criteria

Regarding the power usage cost, I used the HP ProLiant DL360 G7 servers model as a case study for this blog. The below table shows the approximate cost for the considered attributes.
Table 1. LCC Costs
 Analysis and Comparison of the Alternative
 The following tables show the life cycle cost for each of the alternatives for six years including the year 0 where the design and data center development is completed.
Table 2. LLC for hosting in the company premise.
Table 3. LLC for hosting in a co-location service provider.
Table 4. LLC for hosting in a Google Cloud.
Selection of the Preferred Alternative
Although the Life Cycle Cost analysis shows that hosting in Google Cloud is the best alternative, we are not allowed to do that from the legal perspective. So, renting the co-location service with a Life Cycle Cost of $ 310,000.000 is the preferred alternative. This option was the same in the previous blog where I used the MADM technique.
Performance Monitoring and the Post Evaluation of Result
Being up-to-date with the legal announcements and disclosers might enable hosting in the cloud. Also, monitoring the performance and support given by the hosting company is essential for providing a good service.
References
1.       How can I determine the power demand of an HP server's power supply under load? (n.d.). Retrieved from https://serverfault.com/questions/662501/how-can-i-determine-the-power-demand-of-an-hp-servers-power-supply-under-load
2.       Server Lifecycles and Cost analysis | Improve Your IT. (2014, February 11). Retrieved from http://www.improveyourit.com/server-lifecycles-cost-analysis-2/
3.       Oman Data Park - Hosting, Colocation, Cloud Services, Managed Services. (n.d.). Retrieved from https://omandatapark.com
4.       Life Cycle Costing [Video file]. (2014, June 4). Retrieved from https://www.youtube.com/watch?v=tuYW_lZ1Q3M
5.       Google Cloud Computing, Hosting Services & APIs | Google Cloud Platform. (n.d.). Retrieved from http://cloud.google.com
6.       Lifecycle costing ACCA F5 [Video file]. (2016, June 15). Retrieved from https://www.youtube.com/watch?v=8fKGfsgdFmE


Comments

  1. Dr. PDGDecember 7, 2017 at 10:18 AM

    EXCELLENT, Ishaq!!! This is exactly the kind of "360 degree" research analysis that you need to do in order to be able to "sell" your ideas and suggestions to your management.

    One question- WHY is the "cloud" choice illegal and is it something that your ruling legislators need to rethink or reconsider? What are the "root causes" that formed the basis for making that option illegal in the first place?

    MAYBE the time has come to revisit those reasons, given that the world of cloud computing is changing so rapidly? This could be an opportunity to really make a name for yourself... (Or get yourself killed......!!!) ;-)

    BR,
    Dr. PDG, Jakarta

    ReplyDelete

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