Understanding Return on Investment for Data Center Consolidation
NAVAL POSTGRADUATE SCHOOL MONTEREY CA
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The federal government has mandated that agencies consolidate data centers in order to gain efficiencies and cost savings. It is a well-established fact that both public and private organizations have reported considerable cost savings from consolidating data centers however, in the case of federal agencies, no established methodology for valuing the benefits has been delineated. Nevertheless, numerous federal policies mandate that investments in IT demonstrate a positive return on investment ROI. The problem is that the Department of Defense does not have clear instructions on how to measure ROI in order to evaluate an opportunity to consolidate data centers. While calculating ROI for IT can be very challenging, most private and public firms have methods for demonstrating a return ratio and not only cost savings. Therefore, choosing metrics and methodologies for calculating ROI is an important step in the decision-making process. This complexity complicates estimating a data centers utility and the true value generation of merging data centers. This thesis will explore the challenges that the Marine Corps faces for calculating ROI for data center consolidation.
- Economics and Cost Analysis