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Executive Summary There are many reasons for organizations to move from traditional IT infrastructure to Cloud Computing. One ofTable of Contents the most cited benefits is the economics of the Cloud. YetExecutive Summary 1 while many people point out the cost savings that CloudThe Problem with the 80-20 Rule 2 Computing brings to an organization, we believe attentionRemember the Opportunity Cost 4 should be drawn to four distinct mechanisms throughOpEx is the New CapEx 5 which these cost savings are generated: Financial Considerations 5 Allows Business Units to Decide 6 • By lowering the opportunity cost of running Overcomes Expenditure Limitations 6 technologyTotal Cost of Ownership 7 • By allowing for a shift from capital expenditure toA Gregory/Ricochet fashions Case Study: operating expenditurea TCO win using Software-as-a-Service 8 • By lowering the total cost of ownership (TCO) ofTime is Money: Focus on What Matters 9 technologyConclusion 10 • By giving organizations the ability to add businessAppendix 1 11 value by renewed focus on core activities The Ten Laws of Cloudonomics 11About Diversity Analysis 13 In this paper we detail these four mechanisms andAbout Rackspace 14 introduce several case studies and examples to show the increased economic value that Cloud Computing brings to an organization.