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Designing the Feasibility of Migrating Cloud Computing to the Use of IT

Infrastructure Using the Cost–Benefit Analysis Method (Case Study:
Telecommunications Industry)

Chapter · February 2024

DOI: 10.1007/978-981-99-7569-3_27

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 Designing the feasibility of migrating cloud computing to
the use of IT infrastructure using the cost-benefit analysis
method (case study: Telecommunications Industry)

Taufik Safar Hidayat1[0000-0002-0228-7426] , Rd. Rohmat Saedudin2[0000-0001-6914-9514] and

Muharman Lubis3[0000-0003-2973-9215]
1,2,3
Telkom University, Jl. Telekomunikasi, 40257, Indonesia
[email protected]

Abstract. The telecommunications industry is currently undergoing a major

shift to cloud computing as part of its digital transformation. The move to cloud
computing presents significant opportunities in terms of operational efficiency,
scalability, innovation, and improved customer experience. Adopting a cloud
model allows organizations to reduce capital investments in physical infrastruc-
ture such as servers and data centers and dynamically manage IT resources as
needed. But this transition also brings new challenges in terms of infrastructure
investment, security, system integration, and changing work culture. A compre-
hensive cost assessment of cloud computing architectures is currently hampered
by a lack of valuation methodologies and a standardized comprehensive total
cost model. This issue creates uncertainty around costs and architectural chang-
es in utilizing the information technology infrastructure. The objective of this
paper is to explore the various costs and benefits associated with moving an or-
ganization's IT infrastructure from on-premises servers to cloud computing. A
cost-benefit analysis can be used to understand the costs associated with the
benefits received by a company or organization. This makes it easier to decide
whether to use cloud computing. These potential benefits include ease of ac-
cess, increased productivity, time savings, and cost savings. In this study, the
authors conduct a thorough literature review to identify existing research on the
cost-benefit analysis of cloud migration, assess the methodology and results of
previous studies, and identify gaps in the literature.

Keywords: Cost-benefit analysis, Cloud computing, Migration, in-house com-

puting, Telecommunication Industry.

1 Introduction

Cloud computing is a new standard in business promotion that prioritizes security,

customer orientation and net profit [1]. Cloud computing is a step forward in the digi-
tal business that combines hardware, software, platform, storage systems and other
computing technology to run applications [2]. Cloud technology enables companies to
increase capacity without additional costs in infrastructure investment, hardware,
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software, and employee. Some researchers report there would be an investment saving
with pay-per-use payment method in cloud [3][4][5][6].
There are several things that make the adoption of cloud computing not as expected,
for example there is no regulation, fear of losing a job, and uncertainty in using usage
fees [4][7]. Other studies emphasize that users often lack cost transparency and are
unable to make informed decisions about CC adoption [6][8].
There are various methods for evaluating migration to cloud computing, one of which
is cost-benefit analysis. Cost-benefit analysis is used to evaluate the use of cloud
computing where the evaluation is by measuring the costs incurred with the benefits
received. Costs used from using cloud computing can be from the use of hardware,
software, and several other cloud computing services [9][10][11]. Several studies also
discuss the difference in costs between the use of local computing and cloud compu-
ting [11][12][13]. Implementation of cloud computing must also consider the benefits
including productivity, business agility, innovation and business excellence, risk and
security [2][14]. The purpose of this study is to understand the cost and benefit factors
resulting from the use of cloud computing.

2 Research Design

To design the feasibility of migrating to cloud computing by cost-benefit analysis, we

used a qualitative research approach. In this study, it was started by conducting a
systematic literature review and conducting interviews with experts. The findings will
be analyzed using the content analysis method. Case studies were conducted to
strengthen the results of this study.
Literature review was carried out by collecting scientific journals in the 2018-2023
timeframe. The keywords are cloud computing, adoption, migration, standard, model,
framework, TCO, total cost of ownership, cost, economic, cost-benefit analysis.
Expert interviews were conducted with practitioners, IT infrastructure architects, ap-
plication managers, and cloud service providers (CSPs). The object of research is to
analyze the feasibility of migrating cloud computing using cost-benefit analysis.
The IS Success Model DeLone and McLean is used to evaluate the success of infor-
mation systems (IS) in an organizational context. This model provides a conceptual
framework that helps in understanding the factors that contribute to the success of IS
and its impact on the organization.

Fig. 1. Theoretical Model , adopted from Delone and McLean IS Success Model [15]
 3

The main research question is – “What factors will influence the feasibility of migrat-
ing to cloud computing”

3 Cloud Computing and Telecommunications Industry

3.1 Cloud Computing

The term cloud computing was introduced in 2006. In that year, technology compa-
nies such as Amazon, Google, IBM introduced cloud computing services that were
affordable and widely accessible to users. The potential use of cloud computing is
growing in the telecommunications industry [16][17]. The benefits of cloud compu-
ting consist of tangible benefits (can be measured) and intangible benefits (cannot be
measured). Tangible benefits in the business context refer to benefits that can be cal-
culated directly, for example reducing costs, increasing productivity and reliability
[14][18]. Intangible benefits do not have a physical and difficult to measure, for ex-
ample focus on core competencies, data security, agility/flexibility, scalability, cus-
tomer satisfaction, and disaster recovery [14][18].
In addition to the emergence of new risks, the use of cloud computing requires an
investment that is not small. In ISO 31000 it is stated that there are 5 risks: Risk
Avoidance, Risk Transfer, Risk Mitigation or Reduction, Risk Acceptance, and Risk
Sharing [19]. A cost-benefit analysis allows you to assess the feasibility of using
cloud computing given the associated costs and risks.

3.2 Findings from the Case study

In this research, we conducted to study 6 applications to be used as case studies in the

telecommunications industry. This application previously used the on-premis infra-
structure of the company which will then be moved to cloud computing.
Several questions were asked in the interview on the topic of technology used, infra-
structure topology, reliability, performance, operations, and efficiency. Several ques-
tions were adapted to the IS Success Model to measure the success of IS implementa-
tion. Several questions will collect information regarding the investment costs that
will be incurred and conduct a deeper study of the benefits to be received, both tangi-
ble and intangible benefits.

Cost.
By migrating to cloud computing, we need to calculate the costs used, consisting of
adoption, procurement, migration, operational, usage and other additional costs
[10][11][20][21]. The costs incurred depend on the needs of the system. therefore
must conduct an assessment of the infrastructure and technology currently used that
4

will be migrated to cloud computing. Infrastructure consists of servers, memory, utili-

zation etc., stack technology consists of OS, database, load balancer, storage, plat-
forms as shown in figures 2 and 3.

Fig. 2. Infrastructure Assessment - Current Infrastructure Inventory

Topic Item Version Purpose

OS Red Hat Enterprise Linux 7 (64-bit) 7.6 Base Operating System
AWS Shield, AWS WAF, AWS Countering DDoS attack and
Front End (AWS)
Cloudfront, AWS EC2 analysing traffic logs
To orchestrate Docker container
Docker Swarm & Docker 19
Front End (Application) Open-source container
Nginx 1.16.1 Web server
Haproxy 2.3.0 To route traffic to Kong Data Plane
Kong 2.2.0 API Gateway
Grafana 7.4.3 Visualize monitoring logs
To store services credentials such as
database etc. Currently it is
Vault 1.7.1 manually used to lookup credentials
(not integrated with any
application)
Kong Control Plane configuration
Postgres 9.5
storage
Backend MongoDB 3.6.21 Database 1
Mysql 5.7 main Database
Redis 5.0.8 Caching
Influxdb 1.8.2 Log storing
Wazuh 4.1 Security control
Deploy Kong for PreProduction,
Docker 19 Konga [Kong GUI], Redis for blog and
gitlab runner
Search, and analyze log data quickly
Elasticsearch 6.8.9
and in near real time
Python 3.9 Services programming language

Fig. 3. Infrastructure Assessment - Application Technology Stack

Several cloud service providers, such as AWS, google, Alibaba provide estimation
calculator calculations for the use of cloud computing infrastructure [22][23][24].
With this calculator, researchers found that costs in the cloud are 52% cheaper than
using local infrastructure. But because currently applications use local infrastructure,
where these costs will occur for the next 3 years until the book value of the infrastruc-
ture is used up, migrating to cloud computing adds to the overall cost. These costs are
the current infrastructure costs, and cloud computing costs. Costs will decrease when
the current infrastructure is removed from the books. With this additional cost, it is
necessary to study it with a cost-benefit analysis, by examining the benefits received.

Benefits
When we migrate to cloud computing, we need guidance and recommendations that
explain the right practice. The guide consists of several pillars such as security, effi-
ciency, resilience, cost effectiveness, and performance [25][26][27][28]. Some of the
benefits of cloud computing are studied so that this technology is right on target. Ben-
efits in the form of tangible and intangible, including employee productivity, scalabil-
ity, flexibility, product innovation, and business agility. Productivity is measured by
 5

how fast the software development process, hardware usage, and product develop-
ment are. From the results of the study, it was found that using cloud computing can
increase productivity by up to 67%. The software development process can be faster
than the previous 14 days, to 1 day.
Cloud computing enables quick and easy access to computing resources, application
development services, and data analysis tools that can be used to drive innovation. By
leveraging cloud infrastructure and services, organizations can reduce time to develop
new products and services, accelerate time-to-market, and respond quickly to market
changes.
The benefits of managing risk and security include increasing security features in
cloud computing. Organizations can benefit from an enhanced security infrastructure,
24/7 monitoring, data encryption, and automatic updates that help reduce security
risks and protect sensitive information. This risk and security management avoids
20% lost revenue caused by data and security leaks.

Analysis
From the interview results, it was found that by using cloud computing, companies
can reduce costs, increase productivity, operations and business agility. For cost op-
timization, it can reduce costs by up to 52% and increase performance by up to 231%.
From productivity it can accelerate the software manufacturing cycle by up to 67%,
so that production of goods can increase. From an operational standpoint, increase
system availability and avoid loss of revenue caused by system downtime.

4 Conclusion and Future Work

Below is a summary of the results attributed to each of the factors associated with
Delone and McLean's IS success model [15]. Factors F1 to F5 refer to the correlation
between the model variables studied.

Fig. 4. A summary of the results attributed to each factor in the model.

Associating these factors with the model gave a clear idea that each of these factors
was consistent with the model's purpose and study. Factor F1 shows a clear correla-
tion between infrastructure quality and usage (implementation) and outcomes such as
migration, infrastructure, reliability, and user satisfaction. Factors F2 and F3, on the
6

other hand, show that the above insights influence usage and user satisfaction. Factors
F4 and F5 proved that the use of the cloud offers several benefits to organizations, as
outlined in the study above. Based on these insights and analyses, the diagram below
clearly shows the application of this model to cloud computing adaptations in telecom
organizations.

Fig. 5. IS Success Model mapped to factors and finding

In the end, this research reveals that apart from costs, there are also benefit factors,
both tangible and tangible, which help analyze the feasibility of migrating to cloud
computing. theoretical models are valid for adoption or migration to cloud computing.
so that the organization can understand the implications and benefits.
Future research can explore migration strategy evaluation, risk analysis, value added
modeling, service quality measurement, and the influence of organizational context

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