Not just a Cloud

While browsing the rather content heavy site of Oracle, I came across this interesting white paper on cloud computing.

Platform-as-a-Service Private Cloud with Oracle Fusion Middleware


It basically says that Oracle has the following offerings for PaaS-

  • Application grid
  • Oracle SOA Suite and Oracle Business Process Management Suite
  • Oracle WebCenter Suite
  • Oracle Identity Management

Here is why traditional software licensing model can be threatened by Cloud Computing. These are very basic and conservative costs. If you have a software budget you can run the numbers yourself.

Suppose you pay $10,000 for an annual license and say an extra $5,000 for hardware costs for it.Assume you are using in house resources (employees) which cost you another $50,000/year.

The per hour cost of this very basic resource is Total Cost/ Number of hours utilized.

Assuming a 100 % utilization at work hours ( which is not possible) but still .

That’s a 40 hour week * 48 weeks ( including holidays).

or 33.85 $ per hour.

That’s the cut off point for you deciding to offshore work to contractors or outsourcing.

Assuming say a more realistic 80% utilization the per hour cost is= $42.31/hour.

Now assume we cant outsource because of data hygiene or some reason- so we take the same people costs/ exclude them and calculate only the total cost of ownership ( software and hardware).

thats $15,000 per 0.8 per 40*48 hours.

That’s still an astonishing 9.76 $ per hour.

Compare this cost with the cost of running a virtual instance of R on an Amazon Ec2.


or using (which is now introducing an Excel add in as well at

The per hour costs are not going to be more than 3.5 $ per hour. Thats much much better than ANY stats software licensed today on ANY desktop /Server configuration.

See the math. Thats why cloud is much more than time sharing, Dr G 😉

First of all, I don’t see anything greatly new and wonderful and different about cloud computing. It was timesharing way back in ’60. It’s not a whole lot different. I certainly have issues asking a bank to send us all their data and we’re going to put it up on a cloud. They’re going to say, ‘What about security? How will I know who else is up there in that cloud?’ I don’t know, it’s just a cloud.-

Dr Jim Goodnight, SAS Institute.


Author: Ajay Ohri

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