Azure Private Cloud

Calculating the Real Benefits of Cloud Migration

Moving workloads to the cloud is rarely an ad-hoc decision. Organizations put together a business case to justify their decision.

But, what are the real measures of cloud migration and how should organizations calculate them?

ROI Calculations Remain Essential

A 2017 study by ISACA – ‘How enterprises are calculating cloud ROI’ – found that 68 percent of CIOs surveyed calculated return on investment (ROI) for cloud migrations.

Around 95 percent calculated potential ROI before migration to support their decisions and justify expenditure on the move. And, 58 percent calculated ROI after the event to ensure that cloud was delivering the anticipated benefits.

Although cloud ROI calculations are important, the challenge for many organizations is identifying the factors to include in the calculation. Traditionally, the key factors were related to cost savings and reduction in capital expenditure. The emphasis now is on non-financial factors, particularly business agility.

Cost savings and CAPEX reduction remain important. Small businesses, for example, can acquire resources from the cloud without upfront expenditure —— moving costs from CAPEX to OPEX. And, for businesses of all sizes, shifting responsibility for operational, maintenance and upgrade costs to a cloud provider can contribute significant savings.

Growing Influence of Non-Financial Measures

Those traditional measures are relatively easy to calculate, based on hard facts. However, the newer non-financial considerations are less tangible and therefore more difficult to calculate. Instead, decision-makers focus on the value cloud delivers to the business. And, they aim to identify the factors that will improve after migration.

Scalability is one of the important benefits. IT can scale its compute and storage resources up or down in line with demand from the businesses. Cloud scalability eliminates the delay and disruption of adding capacity and ensures that the organization can respond quickly to business opportunities.

It also reduces the risk of building surplus capacity that could potentially remain idle. Developments in serverless computing can further increase this benefit. Here, cloud providers only provision resources when a specific event occurs, eliminating the need for idle capacity and making cloud more cost-efficient.

New Ways of Doing Business

The availability of cloud resources can reduce the time taken to develop and launch new applications and services. Experience indicates that the time required to get new services into production has fallen from an average of three months to three days or less with cloud. That, in turn, makes an organization more competitive and responsive to changing business conditions by reducing time to market.

An article in the February 2018 issue of the Harvard Business Review – ‘How Cloud Computing Is Changing Management’ – also found that cloud enabled greater collaboration between IT and line of business for software-based product development. The cloud acts a depository for vast amounts of data that support enhanced product development.

Improved access and mobility is another key benefit. Customers and employees can access cloud-based services, data and applications from any location on any device. This helps increase organizational flexibility and improves customer and user experience.

From Business Now to Cloud Business

There may be many other benefits that are specific to individual businesses. However, the overall message is look at what your business can do now, then forecast what it could do with cloud resources. If cloud migration looks set to add significant value, it’s time to go.

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