Building Return on Investment from Cloud Computing : Cloud Computing Key Performance Indicators and Metrics

 

Cloud Computing introduces an expanded context for service-oriented business and IT.

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

This section gives an overview of ROI models to support Cloud Computing assessments and business cases in two aspects:

  • Key Performance Indicator ratios that target Cloud Computing adoption, comparing specific metrics of traditional IT with Cloud Computing solutions. These have been classified as cost, time, quality, and profitability indicators relating to Cloud Computing characteristics.
  • Key Return on Investment savings models that demonstrate cost, time, quality, compliance, revenue, and profitability improvement by comparing traditional IT with Cloud Computing solutions.

The overview of Cloud Computing ROI models considers both indicators and ROI viewpoints.

Figure 12 shows an overview of Cloud Computing ROI models and KPIs.

Cloud Computing ROI Models and KPIs

Cloud Computing ROI Models and KPIs

Cloud ROI Cost Indicator Ratios

Figure 13 shows the cost indicator ratios, and outline explanations are given below.

Cloud Computing ROI Models – Cost Indicator Ratios

Cloud Computing ROI Models – Cost Indicator Ratios

Availability versus recovery SLA:

  • Indicator of availability performance compared to current service levels

Workload – predictable costs:

  • Indicator of CAPEX cost on-premise ownership versus Cloud

Workload – variable costs:

  • Indicator of OPEX cost for on-premise ownership versus Cloud; indicator of burst cost

CAPEX versus OPEX costs:

  • Indicator of on-premise physical asset TCO versus Cloud TCO

Workload versus utilization %:

  • Indicator of cost-effective Cloud workload utilization

Workload type allocations:

  • Workload size versus memory/processor distribution; indicator of % IT asset workloads using Cloud

Instance to asset ratio:

  • Indicator of % and cost of rationalization/consolidation of IT assets; degree of complexity reduction

Ecosystem – optionality:

  • Indicator of number of commodity assets, APIs, catalog items, self service

Cloud ROI Time Indicator Ratios

Figure 14 shows the time indicator ratios, and outline explanations are given below.

Cloud Computing ROI Models – Time Indicator Ratios

Cloud Computing ROI Models – Time Indicator Ratios

Timeliness:

  • The degree of service responsiveness
  • An indicator of the type of service choice determination

Throughput:

  • The latency of transactions
  • The volume per unit of time throughput
  • An indicator of the workload efficiency

Periodicity:

  • The frequency of demand and supply activity
  • The amplitude of the demand and supply activity

Temporal:

  • The event frequency to real-time action and outcome result

Cloud ROI Quality Indicator Ratios

Figure 15 shows the quality indicator ratios, and outline explanations are given below.

Cloud ROI Quality Indicator Ratios

Cloud ROI Quality Indicator Ratios

Experiential:

  • The quality of perceived user experience
  • The quality of User Interface (UI) design and interaction – ease-of-use

SLAresponse error rate:

  • Frequency of defective responses

Intelligent automation:

  • The level of automation response (agent)

Cloud ROI Profitability Indicator Ratios

Figure 16 shows the profitability indicator ratios, and outline explanations are given below.

Cloud ROI Profitability Indicator Ratios

Cloud ROI Profitability Indicator Ratios

Revenue efficiencies:

  • Ability to generate margin increase/budget efficiency per margin
  • Rate of annuity revenue

Market disruption rate:

  • Rate of revenue growth
  • Rate of new market acquisition

Cloud ROI Savings Models

Figure 17 shows the savings models, and outline explanations are given below.

Cloud Computing ROI Savings Models

Cloud Computing ROI Savings Models

Speed of time reduction:

  • Compression of time reduction by Cloud adoption
  • Rate of change of TCO reduction by Cloud adoption

Optimizing time to deliver/execution:

  • Increase in provisioning speed
  • Speed of multi-sourcing

Speed of cost reduction:

  • Compression of cost reduction by Cloud adoption
  • Rate of change of TCO reduction by Cloud adoption

Optimizing cost of capacity:

  • Aligning cost with usage, CAPEX to OPEX utilization pay-as-you-go savings from Cloud adoption
  • Elastic scaling cost improvements

Optimizing ownership use:

  • Portfolio TCO , license cost reduction from Cloud adoption
  • Open Source adoption
  • SOA re-use adoption

Green costs of Cloud:

  • Green sustainability

Optimizing time to deliver/execution:

  • Increase in provisioning speed
  • Reduced supplycchain costs
  • Speed of multi-sourcing
  • Flexibility/choice

Optimizing margin:

  • Increase in revenue/profit margin from Cloud adoption

 

 

 

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