1. Making Leaders Successful
Every Day

2. The Total Economic Impact™ of
Microsoft Windows Azure
Forrester Research
James Staten
Vice President and Principal Analyst
@Staten7
Sean Owens
Senior Consultant
January 8, 2014

3. © 2013 Forrester Research, Inc. Reproduction Prohibited 3
Agenda
›Understanding Cloud Economics
›Stage 1: Is Cloud Really Cheaper?
›Forrester TEI for Windows Azure
›Stage 2:
›Stage 3: Cloud Optimization
›Recommendations
›Q&A

4. Scaling out turns on the
cloud.
Scaling down turns on cloud
economics.

5. The basics of cloud economics are clear
Elastic scale delivers just-
in-time capacity.
Pay-per-use keeps costs
low.
Self-service fuels
productivity.

6. Turning cloud economics to your favor is the key
• How quickly can you turn off resources no longer in use?
• How small can you get your base footprint?
• Are you leveraging caching as much as you can?
Elastic scale: Scaling down is key.
• Discrete component scaling drives efficiency.
• Autoscaling cloud services often costs less.
• Where traffic goes affects cost.
What you scale matters.
• Some cloud services have off-peak pricing concepts.
• Some cloud services have better costs for certain services/uses.
When and where you do things matters.

7. © 2013 Forrester Research, Inc. Reproduction Prohibited 7
Agenda
›Understanding Cloud Economics
›Stage 1: Is Cloud Really Cheaper?
›Forrester TEI for Windows Azure
›Stage 2:
›Stage 3: Cloud Optimization
›Recommendations
›Q&A

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Introduction to Forrester’s Total Economic Impact (TEI)
›Forrester took a multistep approach:
• Six customers were interviewed
• TEI methodology covers: Costs, Benefits, Risks and Flexibility
• A composite organization was modeled and estimates for it were summarized in the
study
• Developed the TEI Study, to be published on Microsoft’s Windows Azure Website
• Be aware of the following:
The study is commissioned by Microsoft and delivered by Forrester Consulting. It is not meant to be used as a competitive
analysis
Forrester makes no assumptions as to the potential return on investment that other organizations will receive. Forrester strongly
advises that readers use their own estimates within the framework provided in the report to determine the appropriateness of an
investment in Microsoft Windows Azure.
Microsoft reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and
does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
The customer names for the interviews were provided by Microsoft. Microsoft did not participate in customer interviews

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Source: Forrester’s “The Total Economic Impact Of Microsoft Windows Azure,” October 2013
Interviewed Customer Issues
Forrester worked with Microsoft to analyze the total economic impact that
Windows Azure-based solutions have on a number of its customers, who
shared these business challenges:
“With every new operating system, we
have to add that environment to our
development and test farm.”
“We had been spending a lot of
time on server updates, security
patches and other management
tasks.”
“Any time you have to requisition
hardware, it will take weeks [to
arrive].”

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Interviewed Customer Expectations and Results
And customers continued, highlighting expected and realized benefits of
Microsoft Windows Azure solutions:
“A lot of companies fail to realize: We
get our pick of the best developers
because they want to work in the
cloud, and turnover is less since
moving to Azure.”
“Prior to going to Azure, we had to physically distribute our
software, including printing CDs, stuffing envelopes, sending
them out, and such. With Windows Azure, we’re able to put our
software on the website available for download.”
“We started Windows Azure with
four instances. If we built our
datacenter on premises, I would
have requested 10 or 20
servers.”
“All our coupons had to be individually activated; even with
some automation, it would take more than a day, as many
groups were involved. With Service Bus, information-sharing
across groups is automated, and activating a million coupons
takes less than an hour.”
Source: Forrester’s “The Total Economic Impact Of Microsoft Windows Azure,” October 2013

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Microsoft Windows Azure TEI Aggregate Results
Through interviews and data aggregation, Forrester concluded the following
financial impact Microsoft Windows Azure might have on the composite
organization:
ROI:
349%
NPV:
$1,105,902
Source: Forrester’s “The Total Economic Impact Of Microsoft Windows Azure,” October 2013

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*Based on three-year risk-adjusted figures. Values of costs and benefits are representative of a composite organization constructed from aggregated interviews with
Microsoft Windows Azure customers.
Source: Forrester’s “The Total Economic Impact Of Microsoft Windows Azure,” October 2013
Microsoft Windows Azure TEI Aggregate Results
More importantly, the TEI study quantified specific benefits, costs, and
metrics for the composite organization across topics that mattered to
customers:
Costs
$316 thousand
Benefits
$1.4 million
Initial planning and
implementation (one-time)
Improved revenue from increased
customers and faster time-to-market
Reduced marketing costs from
better business responsiveness
Reduced IT management and
software development costs
Avoided hardware costs
(one-time)
$750,000 $1.25 million$500,000$250,000($250,000)($500,000) $1 million $1.5 million
Annual resource consumption and
management costs
Net present value

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Source: Forrester’s “The Total Economic Impact Of Microsoft Windows Azure,” October 2013
Microsoft Windows Azure TEI Results from Customer
Interviews
And in addition to financial benefits, Windows Azure helped enable the
following results for the composite organization:
20 servers
Estimated avoided purchase and
setup costs plus 50 avoided server
upgrades, compared to Windows
Azure pay-what-you-use.
75%
Improvement in marketing campaign
process time leading to significant
business cost savings.
8 weeks
Of reduced development time leading
faster time to market
90%
Reduction in hours required to
manage a Windows Azure hybrid
infrastructure.

14. Three stages of cloud economics

15. Leverage the tools of cloud economics
• When you do something
• For how long you do it
Time
• Parts that act independentlyComponentization
• What performs which actions
• What economics it brings
Service choice
• What doesn’t consume storage
• What doesn’t consume bandwidth
Caching
• How the code behaves
• What the code does and how
• Re-architect to activate cloud economics
Code optimization

16. NVoicePay taps the cloud to expand its market
AP Assist: Enable electronic payments for SMBs
› 90% of B2B invoice payments are still by check.
› Solution: SaaS-based vendor payment
• $0.40 per payment; free vendor sign-up
• Tight integration with key SMB systems (i.e., ADP for car
dealers, First Data payment clearing-house)
 Rich but light client UI — Silverlight
 Needed to push new information to customers quickly
• Needed elastic scalability, fast deploy, and iteration
 Forecasted huge transaction volumes
 Traditional hosting was more expensive — wouldn’t achieve
scale.
• Needed reusable cloud services to speed development
 Windows Azure AppFabric, storage, security services
• Needed effectively 100% availability for “Payment Dial Tone”
 The alternative was to build a massively expensive data center.
“Building a mission-critical B2B
payment network would have
been nearly impossible without the
low cost, pay-as-you-go . . .
Windows Azure platform.”
— Karla Friede, CEO, NVoicePay
For more info, check out NVoicePay website (http://nvoicepay.com/wp-content/uploads/2010/10/NVoicePay-MS-Case-Study.pdf).

17. How is NVoicePay leveraging cloud economics?
› What cloud economics tools are they using?
• Time
• Componentization
• Service choice
• Caching
• Code optimization
For more info, check out NVoicePay website (http://nvoicepay.com/wp-content/uploads/2010/10/NVoicePay-MS-Case-Study.pdf).

18. How NVoicePay activates cloud economics
If it’s running, it’s cutting into profitability.
› Profits are pennies on each $0.40 transaction.
› Mission: Lower the cost of each payment.
• Scale only when necessary.
 Scale only what needs to be scaled when necessary.
• Chatter can cost you.
 Traffic flowing out of the cloud costs $$.
 Keep this traffic to a minimum using:
› Caching, Batching, Rich-client actions.
• Use cloud services to speed development.
 Windows Azure AppFabric Service Bus and Access
Control
 Windows Azure Blob, Table, and Queue Storage
 Windows Azure Connect — secure extra cloud
connectivity
 Silverlight client takes actions that ease cloud-premise
integration.
Key tools used:
 Time
 Componentization
 Service choice
 Caching
For more info, check out NVoicePay website (http://nvoicepay.com/wp-content/uploads/2010/10/NVoicePay-MS-Case-Study.pdf).

19. Recommendations
• How does it generate revenue?
• What actions are taken to get that revenue?
• What components are involved?
• What does the transaction flow cost?
Understand the profitability profile of your cloud service.
• Can you improve its scalability model?
• How can its action timing be improved?
• What alternative means (services, caching, reusable
components) can be leveraged?
Analyze its performance profile.
• Improve cloud coding practices through architectural adherence.
• Architect in how to use the cloud economic tools — not the
specific uses.
• Revisit this process often — as the cloud matures quickly.
Bake the lessons learned into your cloud architecture.

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Agenda
›Market
›Market
›Overview of Forrester’s TEI Study
›Q&A

21. Thank you
James Staten
jstaten@forrester.com
@Staten7
Sean Owens
sowens@forrester.com
+1 425-835-2036