Cloud ROI: Supporting IT Managers ' cloud budget investment with mathematical theory

It's time to apply for a cloud service budget with the chief Financial Officer (CFO). The company's budget cake is so big, are you ready to compete with executives from other departments? What financial managers want most is a return on investment (ROI), and a lack of strong proof must be hard to get out of the hands of these guys. Now, an article entitled "Computing the return on investment in cloud services from a customer perspective" turned out to be a way out for our bitter and haha technicians. As long as the simple math is followed by step-by-step instructions, we can get good evidence of the value of the cloud services, whether public or private.

The ISACA, an organization of IT security and auditing experts, has conducted a systematic survey of the return on investment in cloud computing, and calculated the exact financial and efficiency returns. "We have taken into account the two key elements of investment costs and expected returns in our calculations, and have come to a reassuring conclusion," the report said.

One of the authors of the Cloud Investment return report, Smals, the head of internal audit at the Belgian IT company, and Isaca, president of the Belgian Division, Marc Vael, gave a more detailed explanation. He argues that the formula appears to help enterprise users define the "investment gains" in the cloud technology field. For example, if the cost savings associated with the introduction of cloud computing projects are expected to be $900,000 trillion, the actual net income from the cost of investment is $300,000. Divided by the investment cost of 600,000 dollars, you can learn that the project's return on investment is 50%.

The "Return on Investment" variable contains many concepts, such as the executive essentials necessary to "replace a traditional enterprise network, such as infrastructure or equipment maintenance personnel." In addition, the "new revenue" outlook should also be taken into account, as the services and applications brought by cloud platform vendors may give companies unprecedented "broad market appeal" and "global influence", Vael points out. This is one of the important reasons IT experts have been working to convince enterprise decision makers to take a cloud class plan actively.

Isaca's Guide to return on investment in cloud computing also provides a detailed list of potential spending on cloud computing, which lists a range of cloud services costs that are worth serious discussion, including upfront investment, additional spending, and project termination costs. In the face of "cloud age", enterprises are confronted with not only the "technical preparation", but also the key content of the project cost, such as the change of business environment and the level of supplier management. In addition, "project termination costs" are also the bulk of the cost, once we need to restore the business to the internal facilities or other suppliers for a variety of reasons, the expenses incurred should be accurately assessed.

Having summed up so many practical problems, let's work together to find a solution. Some of the specific financial information involved in the issue will be included in the contract documents of the corporate user and the cloud service provider, but there are some things that need to be taken care of, "Vael explains." In this guide article, the author also mentions the potential negative impact of "business challenges", such as the focus of cloud technology areas such as incompatibility with existing IT infrastructures, security and consistency issues, and vendor dependencies.

ISACA Cloud Computing ROI Guide is designed to cover a variety of service patterns related to cloud technology, including infrastructure, services, platforms, services, and software as services. It divides cloud service into private, community, public and mixed four types, and reviews the similarities and differences of different types in deployment.

The other major financial concepts surrounding cloud computing are "total holding costs" (mainly including ' procurement, the total expenditure of the operation and maintenance projects ') and the "net present value", the so-called net present value, refer to the weighted consideration of "the value shrinkage phenomenon occurring during the use of early capital investment project" and "internal rate of return". The ISACA Guide also provides formulas for these standards.

While it seems a bit overkill to put all the financial input into the equation, it should always be kept in mind that when it or other business units stand at the top of the corporate CFO or executive level to get funding for themselves, the calculation is the most receptive and impressive weapon. For some confused leaders who scoff at technical inputs, we need to be backed by rigorous conclusions, Vael said. He also advises people to try to find "neutral parties" in their businesses and to review their budget proposals from their standpoint. This will ensure that each individual submits a budget that is calculated in the same way that the supposedly "dollar" is unified from the planning stage. Such a fair and open competitive environment is an important auxiliary mechanism to help enterprises make correct decision.