Cloud adoption is becoming more mainstream, with businesses from every sector migrating over and enjoying the benefits of cloud software. However, as with anything, it does not come without challenges. And the cost of these need to be counted in the overall decision about its efficacy.
First things first, how do you decide which company departments or operations are best suited to the cloud? Before you migrate your entire business over, which will invariably present its own challenges, it is best to decipher which parts of your enterprise are best suited to the cloud. So how do you go about this? You will need to break your analyses up to cover four considerations. These are the cost, security and regulatory requirements, speed to market and Return on Investment (ROI).
ROI in and of itself is fairly straightforward. To calculate it, you simply estimate or quantify the benefit or return on investment in financial terms, and divide this by the cost of the investment. The result is expressed as a ratio or percentage and provides a measure of the overall benefit of a strategy, all things considered.
The interesting thing is that ROI can be universally used as a metric for planning your cloud adoption and ascertaining your priorities in terms of which businesses processes would benefit the most from migration. It can then be used as a metric to ascertain if you were correct in your thinking, by comparing the estimated ROI with the actual ROI. And finally, ROI can be used as a metric to analyse ongoing performance or as evidence to halt the progression of a strategy if you predict it to be unfruitful. And if you decide to utilise this widely applicable metric, you would not be alone. In fact, in an IBM survey on enterprises and how they measure cloud adoption success, they found over 80% used ROI to guide the prioritising and implementing of cloud adoption, over 77% said they could effectively use ROI as a performance metric, and over 74% say they consistently use ROI to objectively compare the estimated and real ROIs for cloud initiatives.
Forming your own KPIs
No two companies will be exactly the same so it’s important to assess your own needs for KPIs and which will be most beneficial to your organisation in measuring how successful your cloud adoption actually is.
It seems that of the enterprises surveyed by IBM on the matter, more than 50% considered financial KPIs and found them to be very useful as an indicator of success. These financial KPIs not only include ROI which we have extensively discussed, but also things such as the increase in revenue margin and the rate of change in reduction of total cost of ownership (TCO). It is reasonable that where enterprises and big changes are concerned, financial costs and gains must be a key motivator for the company to be profitable.
Two other key factors should come into play. That is the effect on staff, buy-in and improvement in operations, and the effect on service to the customer. If these things are positive by-products of your cloud adoption strategy, then it would seem success and profitability are inevitable.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.