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Tracking cloud ROI is a challenge for IT executives

6/22/2015 4:08:15 PM

Businesses throughout the world have started to introduce cloud services as a part of their IT departments, with goals ranging from increasing workplace efficiency to eliminating paper clutter and waste and reducing company expenses. But something that has proven to be somewhat of a challenge for many executives is accurately measuring return on investment, due to the the complicated nature of transitioning from on-premise servers to the cloud. 

The cloud's inherent data agility makes ROI difficult to measure
Cloud Technology Partners consultant David Linthicum wrote in an article for InfoWorld that one of the major challenges that executives face when evaluating the ROI of cloud solutions is actually one of the technology's primary assets: its data agility. Linthicum argued that today, organizations value the increased flexibility that the cloud offers over its cost-effectiveness. So even if adopting a service costs more than traditional products - which is a rare, perhaps even nonexistent scenario - most decision-makers will overlook this drawback due to the enhanced abilities to maximize accessibility and streamline workflow. 

"Organizations value the cloud's flexibility over its cost-effectiveness."

However, Linthicum noted, agility is not experienced to a universal degree. Each enterprise will achieve different levels of it, and so the actual payoff of using the cloud varies from case to case. He asserted that while employing a cloud solution can improve the time to market for certain companies, this is not an important aspect of achieving profitability for many businesses. 

Since the cloud can make data agile, and therefore varied, it is challenging to track its actual ROI on an individual basis. According to Linthicum, many IT decision-makers place a higher value on flexibility, anyway, so this is not necessarily a problem. However, there are certain ways to account for some of the many variables that are inherent to cloud computing. Estimating ROI is not impossible, despite the complicated nature of the technology. 

Analytics can provide valuable insights to decision-makers
CIO contributor Paul Trotter broke down the situation in very simple terms: The basic idea behind moving an organization's IT functions to a cloud-based format is to transform business processes, but that transformation itself is what creates challenges in the form of additional or unexpected costs. Since the cloud is relatively new, and there is no decades-old precedent for executives to build upon, many enterprises are simply learning as they go. 

Comparing potential cloud-related expenses with traditional data center costs is a strong decision-making tactic. Comparing potential cloud-related expenses with traditional data center costs is a strong decision-making tactic.

The best way to estimate ROI, the source said, is to compare cloud-related expenses to those associated with traditional on-premise data centers. For example, transitioning to the cloud will likely involve migration costs, monthly payments, training expenses, investments in additional IT staff members and, in some cases, an additional backup system that previously might not have been required. 

This is where the use of data analytics comes in. Trotter remarked that while most businesses go to extensive lengths to record, measure and draw conclusions from consumer-related metrics, they often overlook internal equivalents. Keeping track of and analyzing in-house data can provide IT executives with invaluable insights regarding profitability. The cloud is no exception to this rule, and by methodically examining each individual aspect of its services, decision-makers can most effectively employ strategies that will not only offer company-wide efficiency through data agility; they can also maximize cost-effectiveness. 

Executives who aim to increase their businesses' IT solutions can benefit from careful analysis from a source that has industry expertise. Apptix is an application management software company that has decades of experience in providing both insights and products to decision-makers. When considering the various options for maximizing cloud-related ROI and efficiency, consulting with Apptix can help IT staff members realize new perspectives and unearth a wide variety of options. 

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