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Imagine that an old company of 100 employees is trying to move to the cloud. The "X" company is exploring a

migration from full on-premise model to a cloud-only solution.  "X" company have hired you to conduct a 5 -year Total Cost of Ownership (TCO) analysis. Note that after the migration, the "X" company will transition from software license costs to a subscription-based mode. Consider the following parameters:

The on-premise model employs three full-time engineers and the cloud model employs one full-time engineer.

The salary of one full-time engineer is €70,000 per year

Cloud application costs (subscription fees) per user/per year = €1,200

Users =100


*Costs in the table above are expressed in Thousands of euros i.e. €1 = €1,000.

Please answer the following:

a)      Calculate the relevant missing costs for each model.

b)     Calculate the TCO for each option. Which option is cheaper and by how much?

c)      If the cloud model also employed three engineers, would it make sense to move to the cloud from a financial perspective? If TCO cost were roughly equal, critically analyze weather it would make sense to move to the cloud?


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