Rethinking cloud ROI: Come for cost savings but stay for agility

An agility-based ROI approach is a much more effective way to look at the value of cloud computing, and thus to gain that value.

Companies are moving away from the traditional operations-oriented ROI model and now look toward agility as the core metric to determine value. That’s clear in a new report called “How Enterprises Are Calculating Cloud ROI—And Why Some Enterprises Are Moving Ahead Without It,” from ISACA.

Although this is new to many enterprises and analysis firms, it’s not new to me.  I’ve written many blog posts since 2011 about the reasons to use business agility as a primary metric for calculating the real cloud ROI. It wasn’t just me, of course: Clearly, the cloud experts were talking about agility and ROI. But enterprises were still focused on ops costs and capital cost avoidance as the primary metric.

As I’ve said many times, enterprises come to the cloud for cost savings but stay for the agility. Finally, that slogan seems to be gaining wider acceptance in the Global 2000 enterprises.

We’re going to the turning point right now. That’s very exciting, considering the fact that the cloud is not that disruptive when it’s just for ops saving. 

There are good tools and models for figuring out the ROI of agility that cloud computing can bring. I’ve done a ton of these models, and I can tell you that this is a very different measurement of ROI. Patterns such as the vertical market, the size of the business, and the degree of innovation need to be understood before you can understand the ROI of agility. 

But you can build reusable algorithms that you can take from domain to domain, and dial in historical metrics. For example, you could do so for companies similar to yours that have used cloud computing and have reached this level of ROI due to the agility that cloud has brought. 

Still, it’s difficult to find public case studies to prove ROI assumptions. So your ROI calculations are difficult to verify upfront. But you should proceed nonetheless. It’s important to understand that this agility-based ROI approach is a much more effective way to look at the value of cloud computing technology.

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