Cloud Computing and Return on Investment (ROI)

In an article we shared a few weeks ago, SMB and The Cloud - A Perfect Marriage?, we discussed some of the benefits cloud computing has for small to medium sized businesses.  Today we are going to take a closer look at the economic upside of integrating cloud technology into your business operations, or the Return on Investment (ROI). Return on Investment is essentially just what it sounds like: what is your company getting in return for the investment it is making in any one specific item or area?  Most of the time, ROI is talked about in financial terms.  However, ROI is not always solely related to dollars, which is something we will touch on later in this article. 

If you are considering implementing a web based ERP system or any type of cloud platform for your business management system, you are probably researching ROI as it relates to cloud computing.  As such, you will find that there is a lot written on this topic.  You will also find that just as with many things related to the Information Technology side of business, ROI for cloud computing is not always a simple thing to calculate. When looking at the potential ROI for a migration to a cloud computing platform, there are several aspects to consider.  If you would like an extensive overview of some of these aspects, take a look at the informative white paper published by The Open Group which details several ROI categories to consider when examining the ROI for cloud computing. 

One major cloud computing ROI point that almost every article written on this subject talks about is Cost Reduction.  When a company uses a cloud computing model, there can be a significant reduction in IT related costs.  For example, the IT equipment necessary (servers, racks, etc.) for running and maintaining your business can be reduced substantially by operating on a cloud platform.  This reduction in equipment would in turn create a reduction in labor costs.  Without as much IT equipment to service, companies may focus IT resources on other areas of the business.  Another reduction in cost related to migrating to the cloud may be seen in the area of software expenditures.  Because software can be accessed at any workstation that is connected to the Internet when working on a cloud platform, cloud computing has the potential to eliminate unnecessary or unused individual software licenses on each workstation, thus saving a company money in this respect.  

Another ROI area to think about when considering a cloud computing model is the potential for increased productivity and quality of output.  While productivity and quality may not be true monetary indicators, they are still important points to measure when calculating the ROI of a cloud platform.   The mobility and business continuity aspects of cloud computing are just two of the significant ways the cloud can have a strongly positive effect on productivity in your business.  Depending on the goods or services your business provides, the increase in quality of output seen from migrating to the cloud could be measured in customer satisfaction, customer retention, product defect ratios, or service reliability. 

There is a lot to take into consideration when calculating the ROI of migrating to a cloud platform and we have touched on several of the main points here today.  If you are interested in learning more about the ROI of cloud computing as it relates to your business, or the benefits of using cloud technology in general, contact The Vested Group today.