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Cloud Computing's ROI Increasingly Elusive, Survey Finds

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As cloud computing sweeps through organizations, executives' confidence that they can effectively deploy it and measure its results is waning.

That's the finding of a new survey conducted by The Open Group, an industry consortium. In 2011, the association reports, 55 percent of those surveyed felt that cloud return on investment (ROI) would be easy to evaluate and justify, although only 35 percent had mechanisms in place to do it. In the latest survey conducted at the end of 2012, the proportion that thought it would be easy had gone down to 44 percent, and only 20 percent had mechanisms in place.

Perhaps it's a result of cloud becoming so tightly interwoven with the business that the potential results may be more far-reaching than a single process or two. Or, perhaps, cloud adoption and usage is expanding deeper into business operations at a faster pace than can be measured. In fact, the survey also finds that the types of metrics being employed are expanding beyond simple cost reductions. While cost continues to be the primary cloud ROI metric, there has been a surge in adoption of quality of delivered results and speed of operation, and utilization of resources as metrics as well.

HP's E.G. Nadhan, also active with The Open Group, has been pondering the cloud ROI question for some time, and concludes that what once were sporadic IT costs have become a part of a continuous evaluation process -- which may make capturing ROI measurements a trickier proposition.  "We need to track the cost of cloud and the returns realized on a continuous basis in order to be effective cloud consumers realizing business value for our shareholders," he says.

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," says Dr. Chris Harding, author of the latest study. "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."

As was the case in the previous survey, the overwhelming majority of respondents, 83 percent, said they expect their cloud initiative to significantly impact one or more business processes. However, in the latest survey, only 19 percent felt prepared to manage these changes -- down from 28 percent the year before.

The primary priorities when determining the use of cloud computing continue to be cost, timeliness, and resource optimization. Business opportunity has decreased slightly in priority, and removal of innovation obstacles increased from 2011.

Chris points out that cloud has immense potential for organizations, but efforts to deliver cloud-based solutions need to be "supported by proper instrumentation of the financial parameters of cloud services, so that the architecture, development and operations professionals can keep the enterprise on course." He issues these words of caution:

"Flying by the seat of the pants must have been a great experience for the magnificent men in the flying machines of days gone by, but no one would think of taking that risk with the lives of 500 passengers on a modern aircraft. The business managers of a modern enterprise should not have to take that risk either. We must develop standard Cloud metrics and ROI models, so that they can have instruments to measure success."