The Worth of Cloud Computing

How do you measure the business value of cloud computing? Do traditional IT metrics like ROI and TCO apply? How can the benefits of business agility be applied to the bottom line?

The topic came up during a panel discussion at the Enterprise 2.0 Conference in Boston this week. "How do you measure productivity?" was the reply of one of the panelists.

This has been a problem for IT since the beginning of the enterprise-computing era. Productivity is a slippery concept, especially in connection with information-based knowledge work. It is difficult to draw an equal sign between the productivity of office workers and investment in IT hardware and software.

The topic of ROI as it applies to cloud computing also is not a simple one. I mentioned it in a previous blog and it caused a rather heated debate (check the comments section). One difficulty is that cloud computing has not been a viable business model long enough to apply long-term ROI measurements to it. That historical view is needed to measure the return from the operational expense of software-as-a-service and the cloud versus capital investment in technology over time.

The business agility afforded by SaaS is even harder to measure in bottom-line dollars, but it is one of the most compelling features driving the market. Business value isn't necessarily measured in hard dollars.

InformationWeek offers two free reports on ROI and cloud computing. The first is "The ROI Of Software-As-A-Service," from Forrester Research, and it's available here. The second, "Cloud ROI: Calculating Costs, Benefits, Returns," by InformationWeek Analytics, is available here.How do you measure the business value of cloud computing? Do traditional IT metrics like ROI and TCO apply? How can the benefits of business agility be applied to the bottom line?