Economy of cloud services

Calculation of ROI of cloud services

When does time to ask CFO about budgets for cloud services come whether you will be ready to compete with another departments which need money too? Finance division wants to know about return of investments. The published ISACA (the organization for professionals in the field of IT of security and audit) the management "Calculation of ROI of cloud services: From the point of view of the client" will help to put the financial argumentation for use of public or private clouds.

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.

The hidden costs when using cloud solutions

According to poll of Symantec corporation about elimination of the hidden costs when using cloud solutions of "Avoiding the Hidden Costs of Cloud"^[1] of 2013, the organization worldwide now pass to cloud solutions with the purpose to get competitive advantage due to fall forward, mobility and flexibility of business processes. More than 90% of all organizations at least discuss a possibility of implementation of cloud solutions while last year this indicator was 75%. During the research it became also known that both large corporations, and the companies of small and medium business are influenced by the increased costs connected with unauthorized use by employees of cloud solutions, difficulties of backup and data recovery and also inefficient use of cloud space. Speaking about "unauthorized" or "not authorized" use of cloud solutions, specialists mean situations when the staff of the companies uses for work third-party cloud services without the permission from IT department.

Experts point to a number of key problems which the industry of cloud computing should face in 2013. They are connected, first of all, with financial difficulties and security. The uninterrupted operation of work is considered as an important task in the context of the become frequent cases of shutdowns which constitute still big danger now, than gaps in information security. In the period of holidays one leading provider of cloud services had a shutdown which was quickly eliminated. The fact of emergence of such breakdown impressed the management of some enterprises therefore the questions concerning data loss prevention, backup, data recovery and also the time and finance costs connected with it were brought up. However if to approach case efficiently, the organizations have an opportunity to construct the optimized cloud systems, flexible and safe, allowing to reach the delivered business objectives.

"Having taken deployment of cloud solutions under control, the companies I can get all their advantages in the form of flexibility and economy of means, having reduced at the same time the risks of security and control of data connected with not authorized use of third-party cloud services", – Francis de Suza (Francis deSouza), the president of group of corporate products and company services of Symantec said.

Unauthorized use of cloud solutions

According to survey results, one of the hidden expense sources is unauthorized use by employees of the companies of cloud solutions in circumvention of rules and requirements of these companies. It is surprisingly a widespread problem which for last year 77% of all companies faced. As it appeared, it is more relevant for large corporations (83%), than for the companies of small and medium business (70%) that is probably caused by the sizes.

Among the organizations which faced problems during the work with cloud solutions, 40% got into a situation when confidential information appeared under the threat, and more than a quarter faced cases of "stealing" of accounts, damage of web property and also this or that form of thefts. The most widespread argument for benefit of not authorized application of cloud solutions is a method to save time and money.

Problems of backup and recovery from a cloud

Wide circulation of cloud solutions complicated process of backup and data recovery. First, most the organizations at the same time use 3 and more solutions for backup of the physical, virtual and cloud information that reduces efficiency, increases risks and also attracts personnel training costs. Moreover, 43% of the companies specified that they happened to lose information placed in a cloud while 68% anyway faced problems at its recovery.

And at last, the majority considers process of data recovery of a cloud very slow and tiresome. Only 32% of respondents characterized it as fast while 22% said that after loss of considerable amount of data, their recovery will take 3 days and more.

Inefficient use of cloud storages of data

One of key advantages of cloud storages is simplicity of their providing. And sometimes this simplicity leads to inefficient use of these storages. As a rule, the organizations aim at using 50% of the available disk space and more. At the same time, according to data of poll, this indicator for cloud storages is equal only 17%. There is also huge difference between it indicators at the large companies using about 26% of the available space, both medium and small business where this indicator is equal only 7%. Moreover, about a half of respondents recognize that deduplication is not applied to the most part of data that aggravates a problem.

Data security by transfer

The organizations also place a number of assets in a cloud: web property, online businesses or web applications through which there passes different confidential information, such as personal data of users, financial information, business transactions and other web activity. For security of transfer of such information SSL certificates are used. The research showed that management of a set of SSL certificates presents great difficulties for the companies: only 27% from them estimate this process as "easy", and only 40% are sure that certificates of their partner providing cloud solutions conform to corporate standards.

It is easy to avoid the hidden costs

Survey results show that ignoring of these hidden costs can lead to effects, extremely negative for business. However there is a number of the principles, following to which will allow to avoid these problems substantially:

• formation of rules and standards around information and people, but not technologies and platforms;
• personnel training to rules and standards, monitoring and control of their observance;
• implementation of the tools which are not tied to specific platforms;
• deduplication of the data placed in a cloud.

Notes

See Also

• Cloud computing: main determinations
• Public clouds vs Private clouds
• Creation of private clouds (market of Russia)
• The main trends of the market of private clouds in Russia
• Private clouds: typical customers
• Cloud services (market of Russia)
• Market of IT services of Russia
• Private clouds in a public sector
• Private clouds in the banking sector
• Cloud solutions for SMB
• How to select IT service provider?
• Service companies: western vs domestic
• Data security in a cloud
• World market of cloud services
• Main trends of the world market of private clouds