Key Themes to Remember
• Cloud delivers both tactical and strategic value - so analyze hard and soft costs separately .
• Quantify the value of agility as it may be your greatest overlooked driver for cloud adoption .
• The value of cloud varies greatly depending on the enterprise and the industry . While some companies achieve near 50 % cost savings , others only achieve 10 %. This is typically a good indication that value is there and must be explored .
• Focus on economics early in the cloud adoption journey and involve members of the financial team throughout the analysis . Organizations that are proactive in identifying their cloud ROI streamline their cloud initiatives and achieve greater success .
• Identify what the key drivers are for your organization to adopt the cloud :
• Is there a mandate to reduce costs ?
• Are you losing market share to competitors because of your inability to rapidly develop and deploy applications ?
• Have you experienced outages that are damaging your reputation in the industry ?
• Are you in need of more advanced , and cheaper , business continuity and disaster recovery capabilities ?
• Are you interested in expanding your global footprint and nervous about the latency in your current environment ?
Defining ROI and TCO in the Cloud
Return on Investment ( ROI ): The financial gain from an investment in cloud divided by the cost of that investment .
Let ’ s first look at cloud ROI . While businesses often discuss their “ cloud ROI ,” more often than not they ’ re missing the bigger picture . Most cloud ROI calculations are focusing around IT cost savings and how they affect the bottom line . Instead , cloud ROI should be more about the value that is returned to the organization .
Value drivers that are often overlooked in typical ROI calculations include accelerated time to market , improved developer productivity , decreased provisioning time and many more intangible benefits of cloud .
Total Cost of Ownership ( TCO ): The sum of all direct and indirect costs of the IT estate including all application development , maintenance and support , operations , data center , network , and BC / DR .
Cloud TCO defines what will be spent on the technology after adoption - or what it costs to ‘ run the engine .’ Typically , a TCO analysis looks at the costs of the “ as is ” on-premise infrastructure and compares these costs with the costs of the “ to
46 | THE DOPPLER | SPRING 2016