How do you measure the ROI of cloud computing for digital transformation?

The value of the cloud extends beyond Total Cost of Ownership (TCO) reduction. Organizations observe significant improvements in 1) Operational Resilience (Benefit of improved availability, security, and compliance), 2) Business agility (Deploying new features/ applications faster and reducing errors), 3) Sustainability (Minimizing the environmental impact of business operations), and 4) Staff Productivity (Efficiency improvement by function on a task-by-task basis).

Cloud enables agility, rapid deployment, saves on capex , enables you to leverage latest technologies Measures could include 1) Cost saving 2) Turnaround for implementation of new applications 3) CSAT-Customer satisfaction 4) TCO-Total cost of ownership 5) Productivity -Assess improvements in employee productivity resulting from cloud-based collaboration tools, remote access to resources, and streamlined workflows 6) Carbon footprint-Pre and post comparison However it depends on the entire landscape. Is everything on the cloud, or is it hybrid or on different clouds. Cost can exceed the perceived advantages if roadmap is not planned. Some industries could face challenges with the roundabout time Security challenges and statutes

Cloud computing is probably the fastest way to embark upon and fastrack the Digital transformation journey. It is actually about philosophy and culture to adopt newer ways of working. Benefits are endless - Capex to Opex model, spend visibility, agility, faster GTM, Fastrack new implementations. Cloud eliminates dependencies on a central location, especially for set-ups with more external stakeholders. Cloud provides robust infrastructure for 100% uptime & most importantly any hardware upgrade is just a click away. Managing in-house infrastructure involves many other components and parameters that are eliminated,

This involves evaluating cost savings, operational efficiencies, and strategic business outcomes. First, benchmark current IT expenditures against cloud-related costs, considering capital and operational expenses. However, the true essence of ROI lies in assessing the broader business impact; this includes improved agility, faster time-to-market, enhanced security, and scalability; additionally, it turns into intangible benefits like employee productivity and customer satisfaction. The key is to align cloud investments with specific business objectives, ensuring that the investment propels the organization toward its strategic goals.

I believe Cloud computing wins you speed, agility and savings. Let me explain : Scalability: Grow or shrink resources instantly to meet demand. Flexibility: Access data and applications from anywhere, anytime. Cost-effective: Pay only for what you use, no upfront hardware costs. Increased Security: Benefit from centralised data protection and disaster recovery. Enhanced collaboration: Teams can work together in real-time across locations. In short, it's like renting a powerful computer in the sky instead of building your own in the basement.

To measure the ROI of cloud computing in digital transformation, start with identifying specific transformation goals, like enhancing customer experiences in retail. Next, calculate initial and ongoing cloud costs, including migration, maintenance, and training expenses. Then, measure improvements in key performance indicators (KPIs), such as website traffic, conversion rates, or customer satisfaction scores. For instance, after migrating to the cloud, a retail company saw a 30% increase in online sales. Finally, divide the gain by the investment and multiply by 100 to get the ROI percentage, demonstrating the tangible benefits of cloud adoption for digital transformation.

In my experience, the key challenges (or we can call them concerns in using) cloud service are: - Data privacy/security: this is a major concern, especially in case of saving user data or precious business data like unpatented research data. Although the cloud service provider assures data integrity, security issues like identity theft or data breaches directly influence the users (both loss in revenue and reputation). - Loss of control: Like every other outsourcing cases (as the cloud service provider owns and manages the infrastructure), switching to cloud services will reduce companies' control over the resources they may need for ongoing operations. High dependency on a reliable (high-speed) network is another linked challenge/concern.

Métricas: La brújula de la medición Establecer métricas es como calibrar la brújula, asegurando que cada decisión esté alineada con el norte verdadero. - Financieras: Reducción de costos, aumento de ingresos, márgenes de beneficio... son los números que hablan el idioma de los negocios. VPN, TIR, y el periodo de recuperación de la inversión son herramientas para evaluar la rentabilidad a largo plazo. - No Financieras: El tiempo de comercialización, la satisfacción del cliente, la retención de talento... son intangibles que, aunque difíciles de cuantificar, son vitales para el éxito a largo plazo.

I recognize that cloud computing is a double-edged sword in digital transformation. The complexity and integration challenges can be daunting, but they also present an opportunity for organizations to streamline operations and foster innovation. A robust governance framework is crucial to maximize cloud benefits while mitigating risks. Embracing a culture of agility and collaboration is not just a necessity but a strategic advantage in leveraging cloud computing for sustained growth and competitive edge.

Being completely honest, most organizations see an immeasurable ROI to cloud computing when it comes to process improvement and compliance. Many organizations do not honestly and accurately assess the cost of "doing it all on-premises." The first step to cloud migration should be fully assessing your current costs and time consumption in creating a secured and compliant compute environment.

Determining the Return on Investment (ROI) of cloud computing entails the analysis of the financial advantages acquired through the utilization of cloud services. 1- Identify Costs, such as implementation costs, monthly operating costs and exit costs. 2- Identify Benefits such as cost reduction, increased revenue and operational efficiency. 3- Calculate the ROI with the calculation: ROI = (Total Benefits?Total Costs/Total Costs) x 100. 4- Consider Intangible Benefits, such as agility and scalability, improved security and compliance, and customer satisfaction. The periodic review of ROI is essential to account for company growth and market fluctuations.

Start by setting clear objectives. What do you hope to achieve by moving to the cloud? Do you want to reduce costs, improve agility, or enhance security? Once you know your goals, you can identify the metrics that will help you to measure your progress. Track your costs and benefits over time. This will help you to see how your cloud investment is performing and to identify any areas where you can make improvements. Aim for a realistic TCO comparison. Even if this is ambitious and challenging. Making use of a cloud ROI calculator can help. But relying blindly on a tool is not enough. And as mentioned, comparing costs is only one dimension.

Communicating ROI is a vital step in evaluating and supporting strategic decisions. It's essential to effectively convey this information to your stakeholders, including management, investors, customers, and employees. The methods and tools such as dashboards and charts used to present and explain the ROI should be tailored to the business context.

Top Tip - Make sure your finance team understand how Cloud is charged and how it is accounted for. You would be surprised how much of a difference this makes, and will definitely save you some awkward potential explaining down the road. Finance generally don't like surprises!

Communicating the ROI of cloud computing for digital transformation involves presenting clear, tailored insights to stakeholders. Utilize dashboards, reports, and case studies to articulate benefits concisely. It's crucial to align your communication with audience needs and business goals, emphasizing how cloud adoption drives efficiency, scalability, and innovation. Regularly updating ROI calculations as your cloud strategy and business environment evolve ensures stakeholders stay informed of progress and value. My experience underscores the importance of transparency and adaptability in these communications, fostering trust and aligning expectations for successful digital transformation initiatives.

After calculating the ROI of cloud computing for digital transformation, effective communication is crucial. Stakeholders like management, investors, customers, and employees need to understand the findings. Utilize methods like dashboards, reports, charts, graphs, and case studies to present and explain the ROI. Tailor the message and format to the audience and purpose, emphasizing key insights and recommendations aligned with business goals and strategy. Regularly update and refine the ROI as the cloud environment and business context evolve.

Definitely, it's crucial to convey the value generated by cloud initiatives to various stakeholders, such as management, investors, customers, and employees, in a clear and impactful manner. Effective communication of ROI can lead to increased buy-in from stakeholders, improved decision-making, and support for further cloud investments. ??

Here are a few tips for maximizing the ROI of cloud computing investments: 1. Develop an ROI Model: Cloud computing requires significant up-front costs, so it’s important to understand the expected return on investment before making any major investments. 2. Analyze Cost Savings: A major advantage of cloud computing is the ability to reduce costs by eliminating the need for physical hardware, licensing fees and personnel. 3. Utilize Automation: Automating mundane and repetitive tasks can help reduce costs and make processes more efficient. T 4. Leverage Scalability: Cloud-based systems are designed for scalability, which means that your system can grow as your business does.

Be sure to think about organic growth. It is easy to predict TCO and ROI in a static model. Models are not static most of the time. Build a project intake process and understand the predicted growth from inception of the journey. Things change - form relationships with your internal partners to help understand growth initiatives.

Consideraciones extras: El Mapa no es el territorio Cada industria, cada empresa, tiene su propio mapa. El ROI de la nube varía según el tama?o de la embarcación y el destino final. Los beneficios intangibles, como la mejora de la cultura empresarial o la capacidad de atraer talento, también deben ser considerados. La medición del ROI es un viaje continuo, no un destino final.

There are many tools you can use, but keep in mind that relying blindly on one tool is not enough. Each tool has a different focus, requires different data, or uses different calculation mechanisms. This doesn't make it easy to adapt to your business environment, and it makes it difficult to connect between tools and with the tools your company already has in place. Here are some tools that come to my mind for that: Anaplan, Apptio, Cloudability, IBM Planning Analytics, Excel ?? and TCO calculators from hyperscalers.

ROI for cloud computing shouldn't be considered in isolation; it's crucial to align it with a customer-centric value proposition that addresses either business demands or meets customer needs. Cloud computing is here to provide pace, agility with ready to consume capabilities in order to transform business processes or to enhance customer experiences. To optimise ROI, estimate the cloud usage based on expected and probabilistic volumes and transactions and not rely on wishful thinking, organising cloud resource groups in subscriptions greatly helps identify actual usage of resources across products - starting small and scaling up helps, every time.