Smart Data Collective has written extensively about cloud computing since its inception in 2008. The authors here have discussed the countless benefits of migrating to the cloud. However, despite all the discussions about the benefits of cloud computing, there is one thing that hasn’t been touched on much – the ROI of cloud technology.
It isn’t that cloud technology isn’t highly valuable. The problem is that the ROI is very difficult to measure. Fortunately, a new study intends to address that question. CloudHealth Technologies has conducted new research that may shed some light on this unanswered question.
Measuring the ROI of Cloud Technology
While almost all industry experts agree that cloud computing provides tremendous benefits, the exact value has been difficult to quantify. The biggest problem is that few brands were trying to measure the ROI of their cloud computing solutions, so it was difficult for industry experts to aggregate statistics on it. In 2014, Information Week addressed this issue.
“Augustine and Airbnb land in the minority of respondents to this year’s InformationWeek Cloud ROI Survey — the 20% of companies that don’t calculate ROI for their cloud projects. The other 80% of the 339 companies using or evaluating cloud computing say they’re highly to somewhat likely to calculate ROI for cloud projects.”
Dave Augustine of AirBNB said that the company had “better things to do.” This may have been a reasonable response when brands were first experimenting with cloud technology and didn’t have time to accumulate much data yet.
Another issue is that it has been difficult for some brands to clearly define the cloud. Chris Howard, research vice president at Gartner, explained the challenge.
“There is a flawed perception of cloud computing as one large phenomenon,” said Howard. “Cloud computing is actually a spectrum of things complementing one another and building on a foundation of sharing. Inherent dualities in the cloud computing phenomenon are spawning divergent strategies for cloud computing success. The public cloud, hybrid clouds, and private clouds now dot the landscape of IT based solutions. Because of that, the basic issues have moved from ‘what is cloud’ to ‘how will cloud projects evolve’.”
Unfortunately, those answers are no longer acceptable. They are accountable to their investors, so they must justify every expenditure.
While it is still difficult to quantity the overall ROI of cloud computing, CloudHealth’s new study gives us better insights. They surveyed 338 executives from leading corporations. According to their responses, companies that invest heavily in cloud resources:
- Grow 230% faster than their competitors.
- Generate 35% more revenue than companies that don’t invest in cloud technology.
- They develop new products four times as quickly.
- Are ten times as likely to have a crystal-clear vision of how to achieve their vision of cloud deployment.
- Are 130% more likely to have a detailed strategy for managing costs.
The bottom line of the report is that companies using cloud computing are 2.3 times as likely to lead to have a strong competitive advantage in their vertical.
Adaption Plays a Role
While the CloudHealth study is very compelling, there are a couple of variables that must be factored for:
- There may be a correlation between industries that use cloud technology and existing growth. IT innovators may already have higher growth than companies that sell electric shavers and other consumer goods and may also be more likely to invest in cloud technology.
- CloudHealth also pointed out that governance plays an important role. Too many brands invest a lot of resources in cloud technology, but have little to show for it.
Brands need to invest in a sound governance plan if they want to realize high ROIs from their cloud infrastructure.