Calculating Cloud ROI for Your Enterprise
Assessing the ROI for the cloud is a complex affair. It’s often unclear and can raise roadblocks for investment in the cloud. But, then again, the benefits of the cloud are too appealing to ignore—agility, flexibility, and convenience. But it’s easier for organizations to gain buy-in if they can show the executive team the potential return it can provide. While you can always use an ROI calculator, here are some tips to help you come up with a robust cloud ROI projection.
Work with The Facts
Start by evaluating cloud costs. Many IT managers assume that they are using 100 percent of the resources at their disposal on-premises. They make the mistake of paying for similar infrastructure on the cloud. For example, having 10 TB storage on-premises does not mean you’ll need 10 TB on the cloud. An alternative approach would be to create a profile for your capacity, performance, and availability requirements. Collect this data by monitoring your IT infrastructure. Make sure to review a year’s history to get a clear picture of the fluctuations in resource demands. You should also define your performance and security needs.
The next step is to dig into the expenses. Start by evaluating the costs associated with running the on-premises set up that you want to move to the cloud. Include facilities, hardware, and software costs.
Check with different cloud vendors for pricing. Note that every vendor has its own pricing model, so it’s hard to produce an apples-to-apples comparison. Some vendors have a pay-as-you-go model based on network or CPU usage. Others have a fixed-price model, and others charge per gigabyte. Also, consider the volume discounts available to customers. You’ll have to choose between dedicated and multi-tenanted resources.
Focus on what you need, especially relating to security and performance. Many enterprises make mistakes when evaluating performance during cloud migration. For example, you might need 1TB of storage that throughputs 1000I/Os. But the cloud provider will not mention latency when giving you a quote. You might get a quote for 5 milliseconds while you actually need 2 milliseconds.
As you continue exploring your options, you might notice that your performance requirements are very strict. So, a multi-tenanted environment might not work as well as a dedicated environment. This would mean that you have to fork out more money for your cloud deployment.
Use a Cloud ROI Calculator
Most cloud providers have a cloud ROI calculator that allows you to come up with a cost model for your deployment. These models are very detailed and include information, such as the amount of bandwidth you’re planning to use and your storage requirements. These calculators also allow you to compare the cost of virtualization with that of a local deployment.
While these calculators do help a great deal, they will not do the donkey work for you. They’ll just give you a ballpark figure to work with. You have to dig deeper to get in-depth details about the providers offering vis-à-vis what you’re trying to achieve. Ask the vendor about performance expectations, security, and any other details relevant to your cloud strategy.
Weigh the Costs
You’ve gathered all the information you need to compare on-premises costs to moving to the cloud. The next step is to put all these details into a spreadsheet and weigh the cost of each scenario. From this information, you can, then, determine your return on investment. Don’t forget to include the intangible benefits of moving to the cloud. Being able to access your applications anywhere and at any time is a huge boon to your business.
Tips for Reducing the Cost of Cloud
Sometimes, the only way to have the cloud make sense for your enterprise is to try to minimize the operation costs. Here’s how to go about it:
1. Create Alerts
You can create alerts with a cloud management platform that lets you know when:
- The projected monthly limit has reached a given level.
- It makes sense to change the pricing plan of an instance.
- It detects unused instances or storage volumes for a given period.
2. Use Autoscaling
Use the autoscaling feature provided by your cloud provider to help manage resources better.
3. Don’t Migrate Every Application
You don’t have to move everything to the cloud. As a rule, avoid moving apps that require maximum performance.
4. Use AI and Machine Learning
Machine learning and AI make cloud optimization a breeze. Resource provisioning happens automatically based on learned use cases.
Calculating the cost and the ROI from the cloud can be a complicated affair. However, it is much easier when you monitor the performance of your infrastructure and use this data to define your cloud specifications. Don’t make the cloud ROI calculator the be-all-end-all solution to planning your cloud deployment.