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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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