IVK will get a lot of benefit from
switching to Amazon Web Services (AWS) cloud computing service. According to a
return on investment analysis, assuming IVK spends $1 million dollars in AWS on
each year, the business value will be $537 million by the end of year eleven.
IVK will save money by reducing their costs from their current system. For
example, the average cost of a data breach hit $4 million, representing a 29
percent increase since 2013, according to IBM Security (Gallaugher, 2017). Due to the fact that
the cost of data security has been increasing, IVK needs to invest a lot of
their budget into cybersecurity. However, AWS provides a highly secure data
management which meets the requirements of the security-sensitive organizations
(Cloud Security). Without paying a large extra cost, organizations could
improve their cybersecurity by just implementing AWS. This AWS service will
eliminate a high cost of cybersecurity investment for IVK. In fact, the cost of
IT expenses at IVK estimates $594,000 for network security and $250,000 for
information security (Austin, 2014). Simply, IVK can save $844,000 of security
costs by shifting to AWS. Also, IVK can save hardware maintenance costs and
some other operational costs.
Some intangible costs of implementing a new system include
the time it takes for the organization to learn the system, and to adjust their
work systems to the new technology. If the system is more inconvenient for
employees to use, that is another intangible cost. So according to IVK’s
supply chain management, the estimate of the AWS system may only provide
very few interests to IVK. On the other hand, the benefits from the cloud
computing IVK could get, are the vital
business information to critical stakeholders across their network as well as
the development and collaboration beyond various departments of their
business (Gallaugher,2017). According to Austin, IVK mainly concentrates
on loan servicing in which the goods that are provided to the consumers are in
forms of loans in which the process is done mainly through computers
(Austin,2014). These benefits include better information access, improved
workflow, interdepartmental coordination, and increased customer satisfaction.
Moreover,
IVK as a supply chain does not involve the flow of goods meaning the movement
and storage of raw materials or the inventory process or the finished goods.
Even an asset, such as an expected rate of return on investment (ROI), is not
guaranteed until it pays off. Therefore, intangible benefits offer
opportunities and require constant re-evaluation.
Based on the
estimated variable costs of implementing AWS into IVK's IT system, there is
definitely significant value in paying for IT infrastructure, database
management, implementing Amazon Elastic Computing Cloud, and S3 data storage.
The potential ROI benefits overtime are about $25 million every year until year
eleven, when the discounted cash flow would total $537 million. In addition, it
is also crucial to analyze the tangible and intangible benefits of implementing
AWS. Tangible benefits are ROI, new revenues, total cost of ownership,
shareholder value, and time savings. The intangible benefits are greater
consumer and employee satisfaction, more efficient processes, better tactics
and decisions, better strategies and plans, and single version of the “truth.”
References:
Austin, R. D., Nolan, R. L., & O'Donnell, S. (2014). The adventures of an IT leader. Boston, Mass.: Harvard Business Press, c2014.
Cloud Security. (2018). AWS Cloud Security. Retrieved from https://aws.amazon.com/security/
Gallaugher, J. (2017). Information Systems: A Manager’s Guide to Harnessing Technology.Boston, MA: FlatWorld
No comments:
Post a Comment