Under constant pressure to do more with less, CIOs and CTOs realize that cloud computing can help them do just that. Deploying cloud, however, requires buy-in from stakeholders such as executives and the IT department, who would like to understand the benefits and potential returns that cloud computing offers. But the fact is it can be challenging to quantify the value that cloud brings to a business. The reason partly lies in enterprises’ inability to identify the right metrics that can create a reliable scorecard for cloud performance. Merely considering capacity and utilization is not enough.
Here are four effective ways to measure cloud ROI:
The utilization curve used by Amazon Web Services is often the first thing that comes to mind when thinking about the productivity advantage offered by cloud computing. In most enterprises, different servers are dedicated to specific workloads or departments, often leading to gross under-utilization of servers as well as the resources managing them. Cloud computing enables resource sharing across enterprise workloads, paving the way for higher resource utilization and greater productivity. At the platform and application levels, resource sharing can come from multi-tenancy where applications from different clients can run on a common operating system. British Telecom (BT), for instance, leverages its proprietary BT Cloud Compute platform to accelerate R&D productivity of its Life Sciences division.
#2 Time to market:
Time to deployment is a critical differentiator in today’s hyper-competitive global markets. With cloud computing, businesses can provision and configure applications at unprecedented speeds, dramatically compressing their time to market. Elastic provisioning enabled by cloud is redefining business models as well as customer expectations across industries. This has elevated the status of IT from a back-end to front-end function, helping business scale and respond to market changes at lightening speeds. Faster time to market also impacts lifetime value of products. By increasing the speed of cost reduction and IT asset management, cloud technologies can significantly increase profitability of products, enabling reduced pay-back times and higher ROI. With optimized asset management and maintenance, companies can improve both – design as well as run time performance of products. Ford, one of the world’s leading automobile manufacturers, uses cloud technology for manufacturing its cars to significantly reduce time to market, cut labor costs, and improve customer experience.
Improved productivity at lower costs and faster time to market gives the right impetus for businesses looking to break new ground in terms of size. Businesses do not need to invest heavily while entering and testing new markets when using cloud technologies. This makes cloud computing a favorite with start-ups, small and mid-size companies. With a ready-to-use cloud development platform, companies can quickly build a proof-of-concept program without having to worry about spending time and money on buying, installing, and setting up hardware and software infrastructure. The cloud enables companies to scale and pay for added service capacity and infrastructure as their new business grows, freeing up capital and resources to focus on building core competencies. Microsoft recently launched IoT Central, an Azure cloud based IoT platform to lower entry barriers and accelerate penetration of Korean market.
#4 Quality of service:
Cloud adoption is soaring – the coming 15 months will see 80% of all IT budgets being dedicated to cloud solutions. This means, not just you, your competitors are also going the cloud way. How then do you differentiate yourself even as you achieve faster time to market, lower costs, and higher productivity? The answer lies in leveraging the cloud to improve ‘service quality’ and ‘value delivered’ to drive the ultimate long-term ROI gains.
Going beyond incremental value addition
While in a pre-cloud IT environment, the IT department of an organization was the undisputed decision-maker when it came to software solutions, today every department from sales and marketing to finance and logistics wants a piece of the ‘cloud’ pie. Technology buying decisions are increasingly moving out of the traditional tech boundaries. Upwards of 18 decision-makers now participate in a typical IT purchase decision, with an almost even split between IT and the business. This shift in power often makes it difficult to holistically implement cloud initiatives, further impacting ROI measurement. But when done correctly, cloud is capable of delivering 5X to 10X improvement in performance. Developing a strategic cloud adoption plan that outlines the decision process, defines ownerships, and identifies relevant business considerations is key to generating the highest ROI from cloud investments.