Is An Investment

Worth It?

In The

It’s important to establish and measure parameters for return

on investment (ROI) on Cloud Computing initiatives. By

analysing the advantages of Cloud Computing since the

beginning, IT personnel can show potential returns to the top

executives and encourage them to get their buy-in towards

cloud programs.

Cloud Computing is a disruptive technological change

which has resulted from the convergence of existing as

well as new technologies.

There are two aspects that can be used in assessing ROI

on Cloud Computing

Key Performance

Indicators

Key Return on

Investment

These are the ratios that target cloud adoption, comparing

metrics of cloud computing solutions with those of traditional IT.

These can be categorised into – cost, time, quality and

profitability.

Key Performance Indicators

A model which compares the traditional IT and cloud solutions

on the basis of savings accrued in terms of cost, time, quality,

profitability.

These models represent the viewpoints of the vendor and not

the user, as they just show the IT capacity measured by network

bandwidth, CPU cycles, storage and memory capacity or IT

utilization measured by volume of usage and uptime availability.

Key Return on Investment

Ways to Calculate

Cloud Computing

ROI

Resource

optimization

Flexibility in

application

optimisation

Faster Decision

Making Capability

Impact on cost

structure

Scale and

specialisation

Quality of Service

(QoS)

Resource Optimization

Cloud computing makes it possible for organisations to match

the amount of resources they deploy to their business activity

as it grows or shrinks.

Every organisation needs resources either at peak times or

off-peak times, thus most enterprises provision for the peak

times while in off-peak times these resources go unutilized.

Traditionally, in many companies resources such as server

capacities are dedicated to particular departments or

functions and may result in an under-utilization.

It is a normal situation that while some departments are

requesting new servers, others are having capacities going

wasted.

Flexibility In Application Optimisation

Users can choose, design and configure applications and

infrastructure that suits best to their business needs.

This leads to more customization and hence improves service

quality.

Doing this in-house can lead to significantly higher relative

costs.

Faster Decision Making Capability

One of the key outcomes of a cloud strategy is that it aids in

the business decision making.

Cloud computing provides additional cost savings by

minimizing delays in decision making by utilizing pre-built

services and enabling a faster turnaround time.

Time-sensitive decisions can be taken on the basis of facts

that are available at minimal time intervals.

Impact On Cost Structure

When companies adopt a pay-per-use model such as cloud, it

enables them to have higher levels of cost control and thus

aids revenue growth.

Instead of having large, dedicated systems on which usage

may expand or contract, companies can make sure that

they’re using the same amount of resources, but are paying

for lesser resource.

IT provides companies the required bandwidth to focus on

getting more clients, enter new markets or improve their

service delivery.

Scale And Specialisation

In addition to the above benefits, cloud computing can also

lead to lower IT costs as an outcome of economies of scale

and specialization.

A cloud provider operates at a much larger scale, and having

a large clientele ensures that problems solved for one of the

users can be fixed proactively for other users of the service.

Quality Of Service (QoS)

Basic quality of service is measured by using parameters

such as reliability, availability, manageability, responsiveness,

recoverability, security, throughput and user-satisfaction.

In addition to these, customer churn rate is also an important

(and easy to measure) parameter of quality and overall

effectiveness of cloud initiatives. This not only brings in a third-

party perspective in your efforts of quality improvement but

also helps keep a tab on user sentiments.

Read more on Cloud Computing:

1. How Cloud Computing Will Evolve In 2015?

3. Top 5 Cloud Security Risks And Measures To Be Taken

2. Amazon Web Services: Next Generation Of Cloud Computing

Thank you for Reading!

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