Can Cloud Computing Really Cut Expenses by Half?

The return on investment (ROI) of cloud computing is, well, cloudy at best – as the numbers vary based on who you’re talking to – vendor, managed service provider (MSP), value added reseller (VAR), chief information officer, engineer…and the list goes on.

In fact, businesses that migrate their IT systems to the cloud could save at least 50 percent of their expenses, according to a new study released by DataOne Asia, an independent provider of IT services in the Philippines, PC Advisor reported.

“This is because the cloud minimizes the cost of infrastructure, management and support,” explained DataOne Asia President and CEO Cyril Rocke.

Most notable, the cloud can help companies minimize expenses on procuring and maintaining their IT infrastructure, Rocke explained.

“Most IT users tend to underestimate the cost of procuring infrastructure. Whenever a company wants to buy IT equipment like servers, they cannot do it in a snap,” he said. “They need to follow a long procurement process where they have to justify the project, write cost-benefit analyses, and submit the necessary papers to different departments. Sometimes, there’s even a need to hire IT experts that will decide which equipment is best for a company.”

The metrics used to measure ROI affect how an organization comes up with a hard dollar amount of cost savings – but there are other areas that cloud benefits, which can’t be measured based on metrics alone, MSPToday recently reported.

In a separate study, respondents said that cost, delivered results and speed of operations continue to be the most popular ROI metrics for cloud. According to those surveyed by The Open Group, the key drivers within organizations for implementing cloud services are cost, timeliness and resource optimization.

Whatever the reason for the shortfall in cloud ROI measurements, the survey results demonstrate that “enterprise pilots are flying by the seats of their pants,” Dr. Chris Harding, author of the study, explained in a blog post. “This shows, arguably, more realism, but it certainly doesn’t show any increased tendency to monitor the value delivered by cloud. In fact, it shows the reverse.”

Developing ROI models that show how cloud computing adoption can benefit both business and IT consumers as well as providers involves examining the key technology features and business operating model changes.