How to measure the cloud’s financial value

How to measure the cloud’s financial value
May 10, 2021  |  BY

Companies already know the value of the cloud. With its scalability and flexibility, as well as its cost reduction and collaborative capabilities, cloud computing provides organizations of all sizes with many benefits. Yet many CIOs and CFOs still wonder how they can see real financial value.

That’s a justifiable question, as leaders have experienced how the cloud delivers many intangible benefits. For example, they’ve seen cloud being the ultimate catalyst for innovation, which in turn leads to new products and services (and new revenue streams).

But the dollars we can see are the ones that shine the brightest. To assess where the cloud delivers real financial value, companies must first define how they would calculate ROI. And that calculation needs to include more than cost savings. You need to take a comprehensive view of the cloud’s overall benefits.

Here’s one way to approach the exercise: Pinpoint the value you want from the cloud, and then be sure to connect it with the appropriate business case. This could be a lower total cost of ownership, real-time operating costs, communication costs, and other common yet essential bottom-line factors.

Another way to assess cloud ROI is how it can help you to slash technology debt in order to become more agile. Remember, the cloud is an ideal platform for exploring new ideas, which ultimately leads to quicker innovation and new business models. Accordingly, your cloud ROI analysis must also include the cost of not implementing the cloud. That is a critical component of your assessment – you’re always on better footing when you invest in something that allows you to compete in the future.

You can also do a simple apples-to-oranges total cost comparison. Which in this case means, compare the cost difference between an on-premise infrastructure and the cloud in relation to achieving a specific business goal. Some factors to consider include the cost of the cloud migration, and the estimated difference in costs for managed services, networking, third-party tools, and cybersecurity.

Something that often gets lost in the equation is how IT is an invaluable part of the company. Be sure to examine how adopting the cloud can help to shift IT from a cost center to an asset. That’s because the cloud, among other things, allows IT to develop new applications at a significantly faster rate, which means quicker time to market.

The decision between on-premises infrastructure and the cloud will affect every part of the organization. It will impact how you provide customer services, which in turn affects the overall customer experience. Your decision will play a role in your cybersecurity plan. Will the cloud make your security efforts stronger or weaker, and at what cost?

Your decision will also impact your organization’s sustainability efforts. There’s no question that cloud computing is a more energy-efficient option: Migration greatly reduces carbon emissions and the need to buy physical equipment on an ongoing basis.

Ultimately, when weighing the financial value of the cloud, you’re doing more than looking at a spreadsheet. You’re considering how you can best maintain competitive advantage, how you can become more sustainable, and how you can confidently steer the brand into the future. The cloud allows you to achieve all of those goals, and then some.