How to Create Meaningful Cloud ROI Metrics

Cloud is having a “crossing the chasm” moment. It’s moving toward convincing the early majority of enterprise CIOs that the cloud is preferred over on premise solutions for critical services. The cloud provider that wins this group will address two CIO concerns better than others:

  • The cloud reduces IT risk
  • The cloud increases the predictability of their service delivery

Cost will not play a dominant role in convincing the early majority. Those providers that focus their ROI on saving money versus on premise infrastructure will find limited traction. As proof of CIOs’ relative indifference to cost look no further than Office 365’s recent 20–30% price increases and the collective CIO shrug over these increases. This should serve as a warning to Google Cloud’s marketing that is focused on cost savings over AWS. Cloud providers shouldn’t care so much about cost. CIOs will pay premium costs as long as the service decreases certain risks within their environment and/or increases predictability. Lastly, if cost were CIOs’ primary decision factor, then you’d see AWS Glacier and Azure Blob dominating the storage market.

Secondarily, cloud providers that focus on being extremely developer friendly (aka Google Cloud) risk alienating the early majority CIOs by focusing on technical superiority. A technically superior cloud likely will not drive the bottom line for CIOs looking to move to the cloud. VHS vs. Betamax is a great history lesson in why the best technology doesn’t always win.

Most cloud providers need to shift their ROI discussion into the value of downtime and security automation. Most still focus their cost calculators on unit costs of service. However, the players that succeed in the market will create both internal and external tools showing how to quantify the time money value of downtime or delay. For example, tools that enable businesses to quantify how long it takes to provision a server on AWS vs. internally and quantify the value of that time will be valuable. This means that providers who make it easy for customers to create a value for downtime and service delay will tap into those core CIO motivations to reduce risk and increase predictability (remember that predictability doesn’t mean being the fastest, it does mean being the most consistent).

Additionally, these providers will also learn how to show that automated security services, such as AWS Inspector, move faster and enable CIOs to more predictable test and move new services beyond manual on premise security testing. CIOs are extremely familiar with the fact that on premise, manual security testing can take weeks if their security team is backlogged.

As much as this provides advice to cloud providers, I’d encourage CIOs to think deeply about what their risk and predictability checklists looks like so they can define and speed their move to the cloud. Without that checklist, CIOs transition will be increasingly dictated by CMOs and VP of Marketing who grow tired of the long wait and ill defined resistance to the cloud . This is call to both providers and CIOs to define a common language and metrics about how the cloud reduces risks and increases IT service predictability. Because, this transition is not a matter of if, but when. We should all know this by now.