How to use the Cloud: 3 Steps to Measure your ROI

This series has shown you how to choose a cloud environment that suits your needs, prepare for implementation and how to secure your environment, but one of the most important business tools when deciding how to use the cloud is measurement of ROI. Determining this for your cloud can be challenging because there are so many cloud variables and so many potential uses that affect the outcome of your result.Taking into account each of these facets is important to attain an accurate calculation. In my research, I found three articles that outline how to calculate ROI for cloud environments. These act as a good starting point for you when determining the best way to fully calculate your ROI for your cloud. This three-step process walks you through the basics of setting up your process for determining ROI.

1. COMPILE A LIST OF CLOUD FACTORS

Your cloud environment is unique to your business and its goals. Pinpointing how you use your cloud and identifying the factors that influence your ROI is a good starting point for beginning your ROI calculations.

Computerworld released an article in 2010 that outlines eight ways to measure cloud ROI for your business, allowing you to produce dollar amounts to present to your company executives. They outlined their eight methods for calculating ROI as:

  • Speed and rate of change
  • Total cost of ownership optimization
  • Rapid provisioning
  • Increased margin and cost control
  • Dynamic usage
  • Risk and compliance improvement
  • Enhanced capacity utilization
  • Access to business skills and capability improvement

This is a good starting point that lists out several of the factors that you can take into consideration to determine your individual cloud ROI. Although it doesn’t outline exactly how to measure these factors in your calculations, it acts as a checklist that you can run through to make sure you didn’t overlook some of the basic factors of determining your ROI.

2. TAKE INTO ACCOUNT LABOR, SOFTWARE AND OTHER INTANGIBLE ITEMS

It’s easy to forget the items that you can’t see or don't access on a regular basis. Two of these include labor and software. Talk to your IT staff and discover the true inner workings of your environment to see if there are any other factors that impact your ROI.

An article by CloudTweaks gives an example of how they calculated their ROI using a cloud assessment formulated by cloud company Persistent Systems. Their assessment takes into account labor, software, hosting and other variables to determine cloud ROI, and users can input their individual data to determine their ROI.

While this is a good example of how they calculated their cloud ROI, it is not the silver bullet for every business. Because each cloud environment is unique, the means to calculate ROI differs among businesses. Keeping in mind the way you use your own cloud and building that into your assessment can affect your final ROI calculations.

3. CALCULATE THE DOLLARS AND CENTS

Your executives will want to see the final calculation in a format that makes sense for their business. The easiest way to present this is by showing them in monetary format how their cloud environment affects their business’ bottom line.

A third calculator we found was created by Stelligent and is a basic, yet useful tool for calculating a rough ROI for your cloud. It is a calculator based on the average engineer pay rate, number of applications, applications size and architecture complexity. Easy-to-use sliders allow you to adjust the amount of each resource you will be inputting into your system to determine your resulting ROI.

Although there isn’t as much control over these numbers as there are in other calculators, it offers a quick baseline for your ROI in dollars and cents, just the way your top-level executives want to see it. Additionally, it compares an automated environment and a traditional environment to suit your environmental needs for a more accurate reading. This feature can also give you an idea of how much more you could save by implementing an automated platform instead of using traditional methods.

Because of the large number of variables that cloud computing affects, it’s difficult to pinpoint a direct source of ROI, and it is different for each business based on the use of your environment. Many businesses will need to take an approach that combines several of these components to calculate their true ROI from the cloud, but these three steps can help point you in the right direction to determine your true cloud environment’s ROI for your business.