By Martin Veitch, Editorial Director, IDG Connect
Smoke and mirrors remain part of IT: there are false turns at every corner, mirages and plenty of purveyors of snake oil and silver bullets. No wonder that ROI remains tricky to define but justifying costs is one of the many jobs of the CIO. And here’s the good news: with cloud, making a compelling business case is easier than ever.
Quite understandably, the CFO would like to know for what reasons the CIO is purchasing achingly complex technology that chews up hard-earned budget. The answer is usually supplied by an ROI calculator that nobody implicitly believes in but has become a useful accessory: closer to a ready-reckoner or informed estimate perhaps, but useful all the same.
Such are the vagaries of IT investment that it’s hard to say that your ERP upgrade, enterprise software licence agreement or fleet of VR headsets are going to pay for themselves by, say, March 2023, after which it’s all profit, upside and gravy. We don’t know specifically what will happen about user adoption, nor what the impact of the IT investment on revenue will be, or if a better mousetrap will be invented.
Various lockdowns, stay-at-home orders and now the ongoing shift to hybrid working demand a matching change in ICT infrastructure. To work effectively from our studies, shed offices and on the road, we need an adaptive structure.
Neither do we know what the weather, geopolitics or next lockdown will bring to stymie our best-laid plans. So, our ROI calculations should really come with various asterisks, addenda and details of a lorry load of risk factors to be factored in.
Making a case
But what we can do is to what every CIO does, and that’s to use our common sense. Take cloud... and you probably are taking it as the pandemic has seen adoption soar again. Cometh the hour, cometh the platform, to adapt the old saying, and cloud is a very good fit indeed for our times.
Various lockdowns, stay-at-home orders and now the ongoing shift to hybrid working demand a matching change in ICT infrastructure. To work effectively from our studies, shed offices and on the road, we need an adaptive structure. It needs to let many people share resources at the same time and must offer ample scope for virtual collaboration. It will have to be capable of being managed remotely. Security and access to elastic processing, storage and network resources are non-negotiable. We’re going to need to support a range of mobile devices from laptops to smartphones at least, maybe with VDI streaming too. It will help if we can pay for services in a flexible way, based on usage patterns that are currently unknowable. And it would be great if we could easily switch on and off user licences anywhere in the world because the economy is unpredictable. That list is, pretty much, a job description for cloud computing.
This makes building a strong business case for cloud a relatively simple exercise. And, over the past 20 years, many of the perceived negatives of cloud have been resolved and can even be seen as positives. For example, security and data governance were once seen as major blockers to cloud progress. Today, they’re often reasons in favour of adopting cloud because the big clouds have highly efficient SecOps teams, panoramic overview of incoming dangers and best-in-class defensive tools. Similarly, loss of control was once seen as a cloud demerit; today, most companies don’t see the need to own all the administration overhead of IT and are very happy to farm it out to a responsible partner. Concerns over the solidity of key players have also been assuaged as companies like Salesforce have developed towering valuations while the cloud superpowers are some of the world’s largest organisations.
Even relative laggards such as financial services giants are now very keen to adopt cloud, although in many cases more than half their estates remain traditionally on-premise.
Of course, cloud is no universal panacea and businesses need to play their part and accept that areas such as potentially dangerous misconfigurations require attention. There are also persistent concerns over tariffs and Ts and Cs that can be knotty and slow down the ROI calculation process. But we’re in a mature period now where CIOs have embarked on many projects, learning best practices along their ways. Some may not be so bullish as they were in proudly describing themselves as ‘cloud-first’, having experienced the testing challenges of moving legacy applications online, but that too is part of the maturation process.
Even relative laggards such as financial services giants are now very keen to adopt cloud, although in many cases more than half their estates remain traditionally on-premise. Any CIO roundtable may still feature a naysayer or sceptic but today they are usually outliers, often in highly regulated sectors with extraordinary levels of governance required.
“Unless you’re a Raytheon [defence contractor] or in the secret service, I can’t see any reasons why you wouldn’t want to be embedded in cloud today,” says a veteran CIO. “It’s just the default setting where the best software is being written; it’s the room where the smart people are.”
Progressive CIOs use cloud as a large, and usually prevalent, part of the IT mix.
Another CIO makes a related point: “If you want the smartest people to work for you, you can’t give them the old software. I’m not going to be able to hire top programmers if I’m sitting on applications from the dark ages. You’ve got 30-year-old apps on mainframes and the people who know how to administer them are literally retiring and dying. Do you need to get off the horse? Yes, and onto the cloud!”
Progressive CIOs use cloud as a large, and usually prevalent, part of the IT mix. In Gartner terms, the hype has died down, we know how to architect and handle pesky integration issues, and we’re sailing towards ‘the plateau of productivity’.
So, where does that leave the ROI document? Probably looking something like this, in abstract form:
Cloud
On-prem
Cloud ROI
Deployment
Rapid
Slow
Value begins immediately
Payment
Subscription
Upfront + annual tax
Value is easily controllable
Support for mobile devices
Excellent UX with optimisation
Often suboptimal
Multiple device types supported
Scalability and business flexibility
Highly elastic and global
Limited and local
Offers a good fit for changing needs and usage patterns
Admin overhead
Low
High
Cost savings from fewer admins
Infrastructure
Requires good connectivity and client devices
Requires datacentres, servers, mass storage, cooling, power management etc.
Enormous savings on upfront costs and running costs
Security
Excellent
Dependent on local staff expertise
Risks are mitigated
Integration
Very good with other cloud services, via open APIs with on-prem
Can be challenging and require point-to-point custom links
Faster time-to-market for systems and workflows
I don’t know any CIO who has openly offered the view that making an ROI case for cloud (or any other technology choice) is the most exciting part of their job. It’s a necessary evil that will usually require the help and experience of partners. But if ever there was a time to set out why cloud’s time has come and what that can do for the organisation, that time is surely now.
