Cloud computing: Business case required

March 18, 2011 at 11:53 AM

By most accounts, enterprise interest in and deployment of cloud computing is skyrocketing – a potentially problematic situation, some say, given how little information some IT executives have at their disposal for building sound cloud business cases.

 “If IT can't show delivery of internal services at market rates for the same if not better quality than the business can get from cloud providers, then there’s a fundamental problem for longevity of IT being run as a business within the bigger business,” said Chris Pick, CMO at Apptio, a technology business management provider, in an interview.

 A short-coming in necessary metrics is evident in results of a survey Apptio recently conducted in partnership with the Worldwide Executive Council (WEC), a firm that facilitates dialog between senior executives – IT and otherwise – and Wall Street analysts.

 In the survey, for which WEC interviewed 100 U.S. CIOs across verticals, the majority of respondents indicated they’re unable to track utilization or recover costs via chargeback. This in turn, Pick said, complicates the ability to calculate return on investment.

 “Our research shows that while enterprise CIOs remain enchanted by the cloud and the promise of instant scalability and automated provisioning, they’re still struggling to understand the economic drivers behind the cloud decision,” noted Keith Muma, WEC vice president, in a prepared statement.

 Building a strong business case for the cloud means CIOs must be able to calculate their cost of goods sold, Pick said. And that requires fundamental capabilities such as the ability to track utilization and charge IT use back to the business – a sure sign of an organization’s cloud maturity, he added.

 For now, few organizations are taking advantage of this cloud capability. In the survey, 80% of respondents said they use some private cloud infrastructure, yet nearly 90% reported that they’re not charging back for use of the private cloud resources. This represents a big gap in financial transparency and accountability of IT service costs, and therein lies the problem, Pick said.

 “Discussions between IT and the business become strongest when the IT’s internal view is extremely credible and that can then be presented to the business in a way that's trusted and makes them ultimately feel their accountability,” Pick said. “When the complexity of cloud comes into play, if you don't have the foundation of transparency, which ultimately drives credibility and accountability with the business, then everything falls apart.”

 Technology business management, such as provided via Apptio’s on-demand software, can give CIOs the foundation they need, he added.


Beth Schultz

Beth Schultz , contributing editor, has more than two decades of experience as an IT writer and editor. You can find her work at a number of leading IT publications, where she writes on a variety of topics including cloud computing, mobility, network/systems management and security. Find her Linkedin profile here or e-mail her here.

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