You need more than capacity and utilization metrics to demonstrate cloud computing’s ROI to the business. Consider these eight metrics to create a score card of your current and future business and IT needs relating to cloud computing.
1. The speed and rate of change – Cost reduction and cost of adoption /de-adoption is faster in the cloud. Cloud computing creates additional cost transformation benefits by reducing delays in decision costs by adopting pre-built services and a faster rate of transition to new capabilities. This is a common goal for business improvement programs that are lacking resources and skills and that are time sensitive.
2. Total cost of ownership optimization – Users can select, design configure and run infrastructure and applications that are best suited for business needs. Traditionally this has often been decoupled when IT projects are handed off to production services. In cloud computing environments these are joined up.
3. Rapid provisioning – Resources are scaled up and down to follow business activity as it expands and grows or is redirected. Provisioning time compression can go from weeks to hours.
4. Increased margin and cost control – Revenue growth and cost control opportunities allow companies to pursue new customers and markets for business growth and service improvement.
5. Dynamic usage – Elastic provisioning and service management targets real end users and real business needs for functionality as the scope of users and services evolve seeking new solutions.
6. Risk and compliance improvement – Cloud computing green capabilities can be leveraged through shared services.
7. Enhanced capacity utilization – IT avoids over-and under-provisioning of IT services to improve smarter business services.
8. Access to business skills and capability improvement – Cloud computing enables access to new skills and solutions through cloud sourcing on demand solutions.
An initiative from The Open Group has developed a set of key considerations for how to build and measure return on investment (ROI) for cloud computing initiatives from a business perspective. By examining the benefits cloud computing offers organizations and showing the potential return it can provide from the beginning, companies may find it easier to gain buy-in for cloud initiatives from the executive team, as well as the IT department.
Cloud computing has been described as a technological change brought about by the convergence of a number of new and existing technologies. The promise of cloud computing is identified primarily by the following key technical characteristics:
- The ability to create the illusion of infinite capacity performance is the same if scaled for one or one hundred or one thousand users with consistent service-level characteristics
- Abstraction of the infrastructure so applications are not locked into devices or locations.
- Pay-as-you-go usage of the IT service; you only pay for what you use, with no or minimal up-front investment costs. You typically just use the service through a connection and device.
- Service is on-demand and able to scale up and down with near instant availability. Typically, no forward planning forecast is required.
- Access to applications and information can be obtained from any access point.
But this is only half the story. These technical characteristics can also be found in many non-disruptive technology solutions. What sets the promise of cloud computing apart is that the rate of change, magnitude of cost reduction and specific technical performance impact that cloud computing can provide is not just incremental, but can give a five-to-ten times order of magnitude of improvement.