ROI important in cloud vs conventional IT debate
Date: April 20th, 2012
A new report by InformationWeek has highlighted the importance of companies considering the return on investment (ROI) involved in adopting cloud technologies, versus traditional IT technology.
"Companies that cannot compare costs for public cloud services versus internal IT will be in rough shape once they build private clouds and adopt a hybrid setup," said Lorna Garey, content director at InformationWeek. "And just avoiding cloud won’t be an answer, if enterprises don’t want a stark IT cost delta between them and startups."
The study's author, Jonathan Feldman, added: "While there’s an air of inevitability around cloud computing, the ROI calculation has stayed in flux.
"A lot depends on whether we’re talking SaaS, PaaS or IaaS; some are easier to wrap your arms around than others.
"Because of SaaS’s very granular cost methodology, it’s actually pretty straightforward to calculate investment and who benefits, and thus peg return on investment.
"For example, especially for commoditized enterprise applications like email, it’s fairly trivial to figure out how much personnel, storage, servers, software and licenses cost to come up with a per-seat price for in-house email. Then you can compare apples to apples."
The report found 82 per cent of respondents gave preference to cloud computing for new IT services or systems, and 31 per cent planned to comprehensively evaluate ROI for the lifespan of their cloud computing project - with 54 per cent of those respondents likely to evaluate the ROI based on a three to five year time period for comparison.
Written by Louise Boyd