Well, it is simple.
(Trust me I'm not MS fan-boi.)
For the time period 2007-2009, my department spent an estimated $1,100,928 developing and enhancing two primary systems. This included all development and hardware costs. These systems take in between $300M and $400M per year in taxes and fees and are the largest of the kind by number of transactions processed in the US.
Vendor systems in this range have been quoted to us as costing between $4M and $6M outright with $500K to $800K/year in maintenance.
(Our accounting system - which is crap IMO - runs on a shared server and cost $160M.)
Here's how I came up with the figures.
Development Costs for JEDI System November 2007 - January 2009
Software
MSDN $50,000.00
Team Foundation Server $10,000.00
Janis Controls $20,000.00
Atlasoft Controls $20,000.00
Analysts
Specifications $138,622
Documentation $110,856
Training $52,100
Testing $146,178
Programmers
Development: $523,172
Management
Oversight: $30,000.00
Total: $1,100,928.00
Now, you can add in the overhead costs for servers and the personnel to cover the servers. We currently have 89 servers on racks in our server room. These servers must be up 18/6 and are absolutely essential during certain time periods. We have four staff members running the servers and an additional six staff members maintaining our 800+ workstations, LAN and six remote locations.
I’m a taxpayer also, and cannot stand to see money wasted. If I were to move to the cloud – the ultimate in vaporware IMO – we’d be moving to a service level that is set by the vendor and not in our control. We already have some services moved to the cloud. IIRC, the department spent around $1M on a vendor-hosted system that has been less than reliable and very expensive to maintain.