Nov 30 2012

ITPI Study: The Best ROI from the Cloud Isn't Cost Savings

The increased scale, function and availability of the cloud trumps the dollars and cents when it comes to reaping benefits.

When many people think about the value of cloud computing, their minds often jump straight to the potential savings of “outsourcing” IT. After all, if you no longer have to buy servers and hire staff to run some of your IT infrastructure in-house, that has to add up to some serious savings, right?

In some cases, yes. But not always. By focusing only on the potential savings of adopting cloud computing, organizations could be missing out on the real value of a hosted infrastructure, according to results from a recent IT Process Institute (ITPI) study.

“The study reports on success factors that are unique to top performers. We were surprised to find that top performers don’t focus on cost reduction or operational efficiency, but on higher level concerns like agility and scalability,” says Kurt Milne, managing director of the ITPI.

Which aspects of scale and agility saw the most return on investment from the 143-company survey? Development, testing, backup and big data.

According to the survey data, 48 percent of the top-performing companies that deployed cloud projects are using the cloud for software and application development and testing; 49 percent said they used the cloud as a backup tool; and 40 percent said they were tapping into the cloud for big data initiatives.

The Cloud Makes for a Great Testbed

The most significant benefit of the cloud as a development and testing environment is that it allows organizations to experiment and create prototypes without compromising the integrity and security of the internal enterprise network.

Once the idea has been shaped and formed in the cloud, many companies are then bringing those applications into their internal networks. This is what Milne calls an external-first trend among the top performers in the survey.

Besides focusing on the “more” side of cloud computing rather than the “less” side, what else separates cloud winners from cloud losers?

Winners have an unshakeable focus on users and their needs, which requires including them in every phase of a cloud computing project in order to gather their requirements and feedback, Milne says.

“A lot of [IT workers] are engineers, and they ‘know’ what you need without asking you. Their primary MO is tech and building things, not customer service. I've been to a lot of conferences where an IT manager discusses how to set up a virtual provisioning environment, and I think the questions miss the mark,” he says.

Another component of a winning formula for any cloud project is earning the support of a C-level executive or a direct-line business executive. According to the ITPI survey data, cloud projects that were highly visible and supported by the business side achieved better performance than those that were siloed in IT operations.

As part of the push to include business outcomes, there’s also a requirement on the business side to invest resources in the project. That includes advanced training for IT staff. More than 70 percent of the top performers in the ITPI survey had prior experience with application lifecycle management (ALM) tools, so IT workers can’t expect to succeed with amateur-hour skills in the cloud.

Assigning a product manager to the task also helps ensure the overall success of any cloud project. With a product manager on board to monitor user requirements, companies can be more confident that their cloud projects will be successful internally, Milne says.

For more information on the ITPI study, read the Private and Hybrid Cloud IaaS: Project Success Factors report.