5 Ways To Compute Cloud Computing ROI
Cloud computing is quickly becoming a standard for business organizations, big or small. Everywhere you look in the industry cloud computing is being praised as the go to solution for companies trying to save money on IT costs and leverage their business processes to increase profits and probably save time too. But it is seldom shown how cloud computing benefits companies in terms of return on investment (ROI).
- Cost savings. Due to its nature of paying only for what you are using and not the cost of the whole system like in a traditional network hosting model.
- Production Enhancement. This is mainly brought about by applications that enhance the business processes through efficiency and optimization. Another reason is that these applications are consumed through web browsers which even older computers can run without problems compared to installed applications which may need more computing power.
Aspects for Calculating Returns
Now, to calculate returns from cloud computing you do not employ your typical accounting calculations as most of the benefits of cloud computing can be seen in the long run and much of it is intangible. Different opinions differ on how ROI should be calculated but it is obvious that most of them have good points, and depending your organization, you find one calculation favorable than the other. Despite that, let’s look at five ways to calculate ROI from cloud computing.
1. Cost savings and rate of adaption. By reducing costs brought about by delays in decision and quick transitioning to new capabilities to keep up with market trends, organizations can rapidly improve the standing of their company against the competition which brings about more revenue quicker and gives them a chance to grab important market share.
2. Total cost of ownership. Because of a virtually non-existent barrier to entry and low technical skill requirement, cloud computing ensures that even non-IT staff can configure and run infrastructure and applications suited for the organization’s needs. This includes savings through labor and expertise cost, maintenance costs, and of course installation costs.
3. Rapid and dynamic provisioning of resources. Often when an organization grows or transitions, it demands more man power and equipment and this can take weeks to months including the training of new personnel and this could affect the business as this is down time. Cloud computing allows for the rapid provisioning of resources to scale to the growth or reduction eliminating the need for new equipment or decommissioning of no longer needed ones. And with the easy to use applications, this ensures that it is easy to train new or transitioned employees minimizing down time to mere days and ensuring that the new department or business unit becomes productive very quickly.
4. Increased cost and margin control. Growth in revenue and opportunities allow companies to cater to new markets and widen their customer base for further growth and improvement. The scalability of cloud computing allows for the avoidance of under or over provisioning of IT services which always ensures enhanced capacity utilization and avoidance of waste.
5. Process improvement. Through on demand solutions and shared services, organizations can capitalize on the development of new skills and solutions. This leads to better business processes which in turn ensure that the organization is lean enough to adapt to market changes and even see them as new opportunities for growth.
Though not every organization may calculate their ROI using these exact same methods, but you can bet it is still along these lines. But as you can see, it is harder to quantify the returns of cloud computing as most of these are in regards of time, efficiency, and reducing down time. Even though these are intangible, the ROI that cloud computing brings can be very considerable.
By Abdul Salam
He has recently co-authored: Deploying and Managing a Cloud Infrastructure: Real-World Skills for the CompTIA Cloud+ Certification (Wiley).