Calculation of ROI of cloud services

This document will help to calculate profit on the project, having included in it calculation of return of investments. Calculation includes the price of investments and also the expected benefit and shows, this investment is how profitable.

The formula looks so:

ROI = (An investment income – the Amount of investments) _______________________________

Amount of investments

In other words, the only thing that needs to be known, for use of this formula – an investment income. It is not always so simple to define and transfer it to money. Example of use of a formula: if the investment income makes $900 thousand in the form of economy of expenses and new income, and investments made $600 thousand, then as a result of ROI will make 50%.

The Investment income variable can include lack of need to create infrastructure and to employ people for its support that differently would be required for ensuring work of the enterprise. She can also turn on perspectives of new income because the provider of cloud services can provide the application which will open for you new segments of the market or wider scope of audience. It is the only reason for which the head of IT of service should work in the hard contact with business heads.

The guide of ISACA to calculation of POI of cloud services also contains quite impressive list of the expenses associated with a cloud. For example: prepayment, expenses on resuming and failure from services. Too it is worth thinking of all this. The question consists not only in technical readiness for use of clouds, there are still some smaller costs of which you can not think, for example costs for work with vendor. There is also a point of "costs for failure from services" - it is that. What should be spent if you want to replace vendor, or after all to pass to own infrastructure.

You will be able to receive some details directly at vendors, and some of them it is necessary to extort. The management also tells about difficulties and vzmzhny negative aspects of use of a cloud, for example, incompatibility from korprativny to IT infrastructure which should be integrated questions of information security, the satisfaction of standards and fear to become the hostage of vendor.

The management of ISACA (Information Systems Audit and Control Association) was created to tell about the service models including infrastructure as service, the platform as service, applications as service. It defines different characteristics and models of a private cloud, public and hybrid.

Besides, one more financial concept which is a part of service – ownership cost (including "the cost of receiving, operating and support") and cost of the current use of network which is defined as calculation of current costs on the service divided into costs for network for usage time of services plus "the internal speed of return". And the management gives these formulas too.

All these calculations can seem excessive, but remember when you go on a carpet to the chief accountant (CFO) of the enterprise, these are those arguments which it will want to hear. Surely with digits of calculations which will help you to reason the ideas about expenditure of corporate money for technologies. The management also gives one more hint – to be convinced that at the enterprise all calculate profit approximately equally that the competition of departments for money of the enterprise was fair.

• It is possible to find the management (in English) here.

Oracle: the cloud systems — not a panacea

The vice president of Oracle corporation Doug Hughes considers (information of spring of 2014) that the decision on transition to use of public cloud services cannot be simple. As a rule, the decision instant comes when at the enterprise carry out audit of an obsolete equipment. But it is necessary to approach it taking into account the direction of business, a maturity of the company and its IT service and requirements of the legislation, but not to consider that failure from cloud computing without fail will lead to failure. The final decision on implementation of cloud solutions will depend on where and as it is supposed to implement them, Hughes believes.

From the financial point of view one of the main advantages of use of public cloud services is that expenses on them entirely belong to current (OPEX), but not to capital (CAPEX), Hughes noted. Implementing solution on own material resources attracts reference of expenses capital, and at implementation of a private cloud expenses share between current and capital. Public clouds solve also a problem of a software update as responsibility for it is transferred to provider of a cloud service.